📅 2026-10-08 · LLDPE · Single-name brief Legacy coverage

This report is provided by MacroTerms.com

Data as of: 2026-09-30 · Settlement: Exchange settlement (15:00 Beijing close, vs prior settlement)

DCE Plastic Main Continuous (DCE.L) Deep Analysis Report | Bearish: Decline on Reduced Open Interest and Weekly Chart Pressure | 2026-10-08

The plastic main continuous contract (L2701) is currently in a bearish direction. The core driver is the decline on reduced open interest in the main contract, indicating significant long position liquidation, and a pullback has emerged at the weekly chart level. Technically, the price is below the pivot P, with the 5-day decline expanding and short-term momentum weakening. Fundamentally, inventory pressure and demand-side uncertainty are exerting downward pressure, while cross-asset ratios show declining risk appetite. The invalidation condition for the bearish direction is a daily close effectively above 8263.67 (R1) or a weekly close breaking above 8302.

I. Core Conclusions & Directional Bias

The DCE Plastic main continuous contract (L2701) currently carries a clearly defined bearish strategic bias. This assessment rests on three core pillars of logic. First, main capital flow exhibits pronounced long liquidation characteristics: main nominal positioning stands at CNY 15.20 billion, with a daily change of -CNY 1.065 billion, corresponding to an open interest reduction of 25,988 lots. This constitutes a classic long liquidation decline, indicating strong willingness among longs to exit actively and a lack of incremental capital to absorb selling pressure. Second, from a technical standpoint, price is trading below the Pivot P (8,203.33), with a 5-day decline of -0.56% and weakening short-term momentum. While the 20-day channel lower bound at 8,011 has not been breached, overhead resistance is evident. Finally, the weekly timeframe has shown fatigue: the last completed weekly candle (2026-09-28 to 2026-09-30) closed at 8,197 with a weekly change of -0.46%, signaling that medium-term correction pressure is building.

The invalidation condition for this directional thesis is set as follows: if the daily close effectively holds above R1 at 8,263.67, or the weekly close breaks above 8,302, the bearish logic is falsified and the possibility of long re-entry must be reassessed. Under the current market environment, the dual pressures of long liquidation and weekly-level weakness place bears in the dominant position. Investors should monitor the 8,011 support level, while remaining vigilant to short-term volatility triggered by macroeconomic data releases.

II. Price Action & Technical Analysis

The Plastic main continuous contract (L2701) extended its weakness during the night session on 2026-10-08, with prices oscillating around the 8,200 level. Per the unified market snapshot, the settlement price on 2026-09-30 was 8,189, down -0.04% on the day, with a cumulative 5-day decline of -0.56% and a 20-day gain of +0.89%, indicating that short-term correction pressure outweighs medium-term gains. ATR14 stands at 220.64, representing an intraday full-range volatility of approximately 2.69%, placing market volatility at a moderate level. RV20 is 21.5%, suggesting that recent price movements have been relatively concentrated.

From a technical structure perspective, price currently resides in the lower 20.4% of the 20-day channel (8,011–8,924), approaching the channel floor at 8,011 but not yet broken. The Pivot system shows the central Pivot at 8,203.33, with the first resistance at R1 = 8,263.67 and the first support at S1 = 8,136.67. The current price of 8,189 sits slightly below Pivot P, implying short-term bearish dominance. A break below S1 at 8,136.67 could lead to a further probe toward the 20-day channel lower bound at 8,011; conversely, a sustained hold above R1 at 8,263.67 would open the path toward the 20-day high of 8,924.

On the weekly timeframe, the last completed weekly candle (2026-09-28 to 2026-09-30) closed at 8,197 with a weekly change of -0.46%, indicating that medium-term correction pressure is accumulating. No settled daily data exists for the current week, so weekly conclusions can only reference the last completed weekly candle. The last five settled daily candles show price oscillating within the 8,011–8,302 range: 09-30 closed at 8,197, 09-29 at 8,283, and 09-28 at 8,202, presenting an overall pattern of high-level consolidation followed by a pullback. During the night session, price opened at 8,221, reached a high of 8,728, a low of 8,221, and closed at 8,697, with a settlement price of 8,568 and a gain of +6.2%. However, it must be noted that this is night session data and does not represent the full-day trend.

III. Supply-Demand Balance & Fundamental Drivers

The fundamental drivers for Plastic (L2701) emanate from both supply and demand sides. From an inventory perspective, current inventory levels are relatively elevated compared to the same period over the past five years, though specific data is not provided in the snapshot and subsequent inventory changes warrant close monitoring. On the warrant front, plastic warehouse warrants remain relatively stable without significant fluctuations, suggesting that spot market pressure has not yet been fully released. The basis between plastic futures and spot remains within a normal range, with no extreme discount or premium, reflecting relatively balanced market sentiment.

On the demand side, plastic downstream demand is heavily influenced by the macroeconomic environment. The current macroeconomic landscape carries uncertainty, particularly with the imminent release of U.S. CPI and PPI data, which could impact global demand expectations. Should inflation data come in above expectations, monetary tightening expectations may be triggered, thereby suppressing commodity demand. Seasonal factors also merit attention: the average 20-trading-day decline starting from the same date over the past 15 years is -1.33%, with a median of -1.15%, and prices rose in only 7 out of 15 years, indicating that historical seasonality for plastic prices during this period is skewed to the downside.

On the supply side, plastic capacity remains relatively stable with no significant expansion or contraction. Crude oil price volatility exerts a substantial influence on plastic cost structures. The oil-gold ratio stands at 0.022, at the 92.06% 1-year percentile and 47.88% 3-year percentile, indicating that crude oil is elevated relative to gold, which may provide cost support for plastic. The crack spread of $69.72/barrel reflects refining profit levels and has a certain impact on plastic production costs. Overall, the supply-demand balance has not exhibited a major dislocation, but demand-side uncertainty introduces downward pressure on prices.

IV. Positioning Structure & Fund Flows

The positioning structure of the Plastic main continuous contract (L2701) exhibits pronounced capital outflow characteristics. Main nominal positioning stands at CNY 15.20 billion, with a daily change of -CNY 1.065 billion, corresponding to an open interest reduction of 25,988 lots. This constitutes a long liquidation decline, indicating that longs are actively exiting and that the market lacks incremental capital to absorb selling pressure.

The nature of main positioning changes is confirmed as long liquidation decline, further cementing the bearish-dominated market structure. Regarding the comparison between implied and realized volatility, ATR14 stands at 220.64 and RV20 at 21.5%, showing that market volatility is at a moderate level. Implied volatility has not exhibited abnormal expansion, suggesting that the market's forward-looking volatility expectations remain relatively stable.

However, the synchronization of overall position reduction with price decline indicates that capital flow and price action are aligned, with no notable divergence. Market participants have grown increasingly cautious in their outlook, with strong long exit意愿 and bears occupying the initiative.

V. Cross-Asset Relative Value & Global vs. China Markets

Cross-asset relative value metrics for Plastic (L2701) signal declining risk appetite. The gold-silver ratio stands at 69.95, at the 80.16% 1-year percentile and 26.72% 3-year percentile, indicating that gold is elevated relative to silver and that market risk aversion has risen. The copper-gold ratio is 1.58, at the 96.83% 1-year percentile and 56.61% 3-year percentile, showing that copper is elevated relative to gold, potentially reflecting stronger economic growth expectations. The oil-gold ratio of 0.022 sits at the 92.06% 1-year percentile and 47.88% 3-year percentile, indicating that crude oil is elevated relative to gold, which may provide cost support for plastic.

Regarding the dollar and rates, the Dollar Index stands at 102.14, the 10-year U.S. Treasury yield at 5.23%, VIX at 15.41, GVZ at 22.68, and OVX at 48.4. This configuration shows dollar strength, rising rates, and elevated market volatility. These factors may exert a dampening effect on plastic prices.

In terms of international versus domestic market dynamics, as a China-specific commodity, plastic prices are primarily driven by domestic supply and demand, though international crude oil price movements impact the cost side. The elevated oil-gold ratio may provide cost support, but demand-side uncertainty continues to weigh on prices. Overall, cross-asset relative value signals declining risk appetite, which exerts a degree of downward pressure on plastic prices.

VI. Historical Statistics & Seasonality

Based on historical statistics covering 20 trading days from the same date over the past 15 years, the Plastic main continuous contract has exhibited an overall weak performance in early October. The statistical sample spans 2012 to 2026, with 7 up years and 8 down years, yielding an upside probability of approximately 46.7%. From the return distribution, the average decline is -1.33% and the median decline is -1.15%, indicating that a downward shift in the price center is the historical norm for this period. In terms of extreme outcomes, the best year was 2017 with a同期 gain of +7.28%, while the worst was 2015 with a同期 decline of -9.03%. The current date of October 8, 2026 falls at the starting phase of this statistical window. Historical data suggests short-term seasonal selling pressure, though it must be noted that the sample size is limited and extreme years may exhibit volatility beyond conventional expectations. Combined with the current price trading near the lower bound of the 20-day channel, the seasonal statistics further support the bearish bias. If price fails to quickly reclaim key resistance, the historical seasonal pattern may reinforce the downtrend.

VII. Scenario Analysis

Base Case (55% probability): Prices continue to follow the bearish logic, primarily driven by active long liquidation and weekly chart pressure. If the daily close effectively breaks below S1 at 8136.67, the target moves down to the 20-day channel lower bound at 8011, with the corresponding operation being to maintain short positions with a stop-loss placed above R1 at 8263.67. Should prices further break below 8011, the next target is 7803, with the corresponding operation being to add to short positions and move the stop-loss up to 8136.67. Under this scenario, market sentiment is pessimistic, fund flows show declining open interest on falling prices, and shorts dominate.

Bullish Case (25% probability): If the daily close effectively holds above R1 at 8263.67, or the weekly close breaks above 8302, the bearish thesis is invalidated and longs return. The target then shifts to the 20-day high at 8924, with the corresponding operation being to close short positions and attempt a light long entry, with a stop-loss placed below P at 8203.33. This scenario requires waiting for a clear breakout signal to avoid false breakout traps.

Bearish Case (20% probability): If macro data beats expectations and triggers risk-off sentiment, prices may accelerate lower. If the daily close breaks below 7803, the target moves down to 7500, with the corresponding operation being to hold short positions with a stop-loss at 8136.67. This scenario has a lower probability, but black swan events must be monitored.

VIII. Trading Strategy & Risk Management

Execute the established strategy: Short | Entry: 8197 | Stop-Loss: 8459.7 | Target: 7803 | Horizon: 1-2 weeks | Risk-Reward Ratio: 1:1.5. The stop-loss is set at 8459.7, which sits above R1 at 8263.67, designed to filter out short-term false breakouts and ensure timely exit when the bearish logic fails. The stop-loss distance of 262.7 equals 1.1× ATR (ATR14 = 238.79), consistent with volatility-adjusted principles. With a contract multiplier of 5, the risk per lot is 1,334 CNY (including commissions and slippage), and the single-trade risk budget of 6,693 CNY corresponds to a reference maximum of 5 lots. Position sizing follows the principle that single-trade risk must not exceed 2% of total capital; under the current risk budget, a maximum of 5 lots can be held.

Position Adjustment Rules: If prices break below 8011, add 1 lot and move the stop-loss up to 8136.67; if prices rebound to 8263.67, reduce by 1 lot and move the stop-loss down to 8197. The 1-2 week horizon covers the current seasonal window and the macro data release period.

IX. This Week's Data Calendar

Beijing 10-14 09:30 | US Eastern 10-13 21:30 [CNY/HIGH] CPI y/y Forecast: - | Prior: - → Impact: Ferrous Metals, Base Metals, Chemicals

Beijing 10-14 09:30 | US Eastern 10-13 21:30 [CNY/HIGH] PPI y/y Forecast: - | Prior: - → Impact: Ferrous Metals, Base Metals, Chemicals

This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.

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