A monster day in the iron ore swap market with the market continuing to recover up around a dollar from yesterday’s close. Huge size trading with an all-time record volume day of over 6.7m tonnes – April a particular winner at 1m tonnes and the Q2/Q3 spread at $1 traded around 500kt per calendar month.
The market performed strongly thanks to short covering and profit taking, a strong physical market in comparison to which paper has been oversold.
News of a cyclone in Dampier, Western Oz, a slightly weaker USD, stronger steel prices, DCE & Rebar on shore futures all performing well added to the sense that perhaps we have bottomed out $55-$56 level and are now testing upside resistance, around $58/$59 on the front months.
There is still a feeling that even if this support continues for the next few days there may not really be the confidence in this market to keep it well supported.
It is safe to say that there are still many offers, perhaps 50 cents to a buck higher, waiting to sell back into it. Perhaps this is a move into consolidation and the market is just picking its new range around $56-$58.
12 March 2015