Part A: Review (2019/1/2-2019/1/4)

From January 2, 2018 to January 4, 2018:the closing price of iron ore futures I1905 contract on Friday was 511 yuan, 16.5 yuan higher than the closing price of the last trading day of last week. The highest price for this week is 512 yuan/ton, and the lowest point is 488 yuan/ton.

This week (2019/1/2-2019/1/4), the total volume of the main contract was 2,550,044 lots, a decrease of 2,323,820 lots from last week. After the close of trading this Friday, the open interest of the main contract was 885,618 lots, an increase of 143,290 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 142.88 million tons, an increase of 1.32 million tons from last week.

Among them, the Australian mine inventory was 76.93 million tons, up 455,100 tons from last week; the Brazilian mine inventory was 35.68 million tons, up 517,100 tons from last week.

The stock of lump ore was 15.59 million tons, an increase of 380,300 tons from last week; the inventory of pellets was 3,629,200 tons, an increase of 134,900 tons from last week; the inventory of iron concentrate was 7,734,800 tons, a decrease of 82,000 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(2018/12/31-2019/1/4), Mysteel surveyed 247 steel mills with a blast

furnace operating rate of 74.8%, down 0.7% from the previous week and down 0.46% year-on-year; blast furnace ironmaking capacity utilization rate was 76.03%, down 0.77% from the previous week and up 1.52% from the previous year; Steel mill profit rate is 76.11%, down 0.4% from the previous week; the daily average molten iron output was 2,126,100 tons, a decrease of 21,700 tons from the previous week and an increase of 42,600 tons year-on-year.

Part C: Transaction Summary

Since 2018/3/26 and up to 2019/1/4 closing, China iron ore futures’ cumulative trading volumes is 351.14 million lots and the cumulative amount of transaction is 16.74 trillion yuan.

Average daily turnover of 1,828,865 lots (2018/3/26-2019/1/4). Open interest declined steadily, with 2,224,492 lots on 2018/3/26 and 1,134,088 lots after the closing of 2019/1/4.

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.