FIS Daily Ferrous Report: More highs after Dragon boat festival

DCE was off to a cold start after the long weekend from the Dragon Boat festival before picking up later in the afternoon session.

During the afternoon trading session, as the DCE picked up from the low of RMB 708.50 and pushed up to day-high of RMB 730 before a slight dip to close at RMB 729.50.

Similarly, the rebar futures recovered from the dip in the morning session before closing at RMB 3,717 at the end of afternoon session.

 

Supply Crunch

Latest report on China’s port inventory indicated that the market was no out of its supply woes yet.

As of last week, the Chinese port inventory recorded at 121.6 million mt after almost a month of falling inventory and away from the peak of 150 million tonnes occurred this year.

The low inventory supported the DCE rally, while the higher China’s May iron ore import also lifted market sentiments.

In May, China imported a total of 83.75 million mt, up 3.7% on-month, or rebounded from an 18-months low import volume in April 2019. However, China’s Jan-May imports went down 5.2% on-year at 423.29 million mt.

 

IO prices to hit $120/mt by August

In view of the persisting supply crunch, Singapore-based steel and iron ore data analytics company Tivlon Technologies (Tivlon) predicted iron ore price to hit $120/mt by August 2019.

Moreover, Tivlon believed Chinese demand to pick up with the various infrastructure projects that support iron ore demand.

 

Short term bullish

During the afternoon trading session of DCE, three white soldiers candlesticks were formed, prompting further rise, or a good entry or exit point. Later, the three soldiers pattern was realized by growth or red candlestick, which might lead to further short term rise when the market re-open at latter session.

Technically, the relative strength index (RSI) was at 55 in the bull territory which suggested the overall technical does look bullish. However, there are still some vulnerability until the intraday RSI’s go above 50.