Market Analysis

The market shows signs of a potential breakout, driven primarily by iron ore, with three key factors contributing to the upward momentum:

  1. Iron Ore Winter Restocking by Steel Mills: Steel mills typically initiate winter restocking for iron ore earlier than steel traders restock finished products. This restocking is expected to conclude around December 20.
  2. Positive Domestic Policy Expectations: Two significant policy meetings are set to take place in China, fueling optimism in the market.
  3. Favorable International Capital Trends: The cooling of the “Trump trade” and a weakening U.S. dollar index have created a favorable environment for commodities.

Technical Outlook

The January rebar contract (RB01) reversed its over-a-month-long trend of reduced positions during upward movement. Last night, it saw a slight increase in positions by 4,309 lots while rising, indicating strong bullish sentiment. The addition of incremental capital suggests a stronger-than-expected bullish outlook.

Comprehensive Forecast

  • Rebar RB01 Contract: Expected to break the 3,350 resistance level and fluctuate within the 3,350-3,430 range.
  • Rebar RB05 Contract: Demonstrating greater strength, it is likely to oscillate within the 3,450-3,550 range.
  • Iron Ore: Likely to surpass the 811 level and operate within the 810-835 range.

The market is poised for dynamic shifts as iron ore leads the momentum and external and domestic factors align to bolster commodity performance.

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