Market Overview:

  • Dollar Index Surge: The dollar index spiked significantly to 109, marking its highest level since October 2022. This reflects heightened risk aversion in global markets, with gold and silver strengthening, exerting downward pressure on commodities.
  • Impact on Steel Prices: While the stronger dollar’s downward pressure hasn’t been fully reflected in steel prices yet, its effect may emerge post-delivery, potentially driving steel prices 50-100 points lower.

Current Trends and Forecast:

  • Present Drivers: The market remains under the “delivery logic” — strong physical demand contrasts with weaker expectations. The 01 and 05 contracts are converging in price, with this dynamic expected to persist until January 6.
  • Fundamentals: Low winter storage interest from both steel mills and traders, coupled with proactive production cuts by mills, is likely to weigh on iron ore prices, creating further pressure on steel.
  • Near-Term Movement: This week, range-bound trading between 3250-3380 remains likely. However, there is a strong probability of a significant price step-down in the coming weeks, with a potential target near 3100.

Strategy:

Follow previously set left-side trading conditions diligently. Once positions are initiated, stick to the trading plan without deviation. Avoid impulsive adjustments to ensure disciplined execution.

📌 Daily insights provided by LangZo Steel. For reprints, please credit LangZo Steel.