Part A: Review (2018/12/24-2018/12/28)

From December 24, 2018 to December 28, 2018:the closing price of iron ore futures I1905 contract on Friday was 494.5 yuan, 2.5 yuan lower than the closing price of the last trading day of last week. The highest price for this week is 498 yuan/ton, and the lowest point is 480.5 yuan/ton.

This week (2018/12/24-2018/12/28), the total volume of the main contract was 4,873,864 lots, an increase of 65,528 lots from last week. After the close of trading this Friday, the open interest of the main contract was 742,328 lots, an increase of 33,870 lots from the last trading day of last week.

Notes: The main contract refers to the futures contract with the maximum open interest.

Part B: Market Dynamics

1.Inventory

(1) Port stock of imported iron ore

Under the background of the country's policy of increasing environmental protection and production limits in various regions, the blast furnace start-up of steel mills has been suppressed. In order to increase the production capacity per unit, steel mills' demand for high-quality mines has gradually increased.

According to the inventory data of 45 ports of Mysteel, as of December 21, the inventory of imported mines at 45 ports was 141.56 million tons, an increase of 2.71 million tons from last week.

Among them, the Australian mine inventory was 76.47 million tons, down 179,100 tons from last week; the Brazilian mine inventory was 35.16 million tons, up 2,200,100 tons from last week.

The stock of lump ore was 15.21 million tons, a decrease of 142,000 tons from last week; the inventory of pellets was 3,494,300 tons, an increase of 618,600 tons from last week; the inventory of iron concentrate was 7,652,800 tons, a decrease of 21,200 tons from last week.

(2) Available days of steel mill inventory

As of December 28, the average available days of imported iron ore stocks in domestic

large and medium-sized steel mills was 29 days.

2. Capacity utilization rate

This week, Mysteel surveyed 247 steel mills with a blast furnace operating rate of 75.49%, up 0.23% from the previous week and up 1.97% year-on-year; blast furnace ironmaking capacity utilization rate was 76.80%, down 0.95% from the previous week and up 3.34% from the previous year; Steel mill profit rate is 76.52%, down 0.81% from the previous week; the daily average molten iron output was 2,147,800 tons, a decrease of 26,600 tons from the previous week and an increase of 93,400 tons year-on-year.

Part C: Transaction Summary

Since March 26 and up to December 28 closing, China iron ore futures’ cumulative trading volumes is 347.97 million lots and the cumulative amount of transaction is 16.58 trillion yuan.

Average daily turnover of 1,841,113 lots (2018/3/26-2018/12/28). Open interest declined steadily, with 2,224,492 lots on March 26th and 947,512 lots after the closing of December 28.

Because DCE raised the delivery quality standards for iron ore futures at the end of 2017, the volume and open interest of iron ore futures showed a downward trend.