📅 2026-10-08 · Cast Aluminum Alloy · 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)

SHFE.AD Deep Analysis Report | Bearish: Low Inventory but Sharp Position Decline | 2026-10-08

SHFE.AD (AD2612) is currently bearish. The core logic is: despite inventory being at a five-year low, main positions have significantly reduced by 3,054 lots, indicating longs are actively exiting, and the price has broken below the lower band of the 20-day channel, putting technical pressure on the market. The directional invalidation condition is a daily close back above 23,935 or a stabilization and rebound in open interest. The report is based on data from 2026-10-08, referencing the AD2612 contract, analyzing technicals, supply and demand, positions, and price ratios, pointing to short-term downside risk.

I. Core Conclusions & Directional Bias

The directional bias for SHFE.AD (AD2612) is clearly bearish. The core driver stems from a dual divergence between supply-demand dynamics and positioning: although inventories are at a five-year low, main contract open interest saw a significant reduction of 3,054 lots following the September 30 settlement, signaling active long liquidation. Price has broken below the lower band of the 20-day channel, leaving technicals under pressure. Three core rationales support this view: First, while inventory data suggests supply tightness, the sharp drop in positioning undermines price support, leaving short-covering momentum insufficient. Second, technically, price has breached the 20-day channel lower band at 23,145, and with a 5-day return of -0.44%, the short-term trend has weakened. Third, in cross-asset relative value, the Gold/Silver ratio sits at the 80.16th percentile over one year, implying rising risk-off sentiment that pressures industrial metals. The directional invalidation condition is: if the daily close reclaims 23,935 (the 20-day high), or if main positioning stops declining and rebounds, the bearish logic fails and shifts to neutral observation. Current market sentiment is cautious; it is recommended to monitor AD2612 volatility within the 23,200–23,500 range and avoid chasing shorts blindly.

II. Price Action & Technicals

SHFE.AD (AD2612) continued its weakness during the night session on 2026-10-08. As of the October 8 close, the AD2612 settlement price was 23,435, down 1.53% from the previous settlement of 23,590, closing at 23,230. Technically, price has broken below the 20-day channel lower band at 23,145 and currently sits at the 47.5% position within the 20-day channel range of 23,145–23,935, indicating a weakening short-term trend. The 5-day return is -0.44% and the 20-day return is +0.15%, but recent consecutive declines with an expanding 5-day drop suggest strengthening bearish forces. ATR14 stands at 285 (1.21%), with significant intraday range; RV20 is 10.9%, indicating rising volatility. Pivot P is 23,546.67, R1 is 23,643.33, and S1 is 23,423.33. Current price is near the S1 support level, but a breakdown may lead to further downside. On the weekly chart, the last completed week (2026-09-28 to 2026-09-30) closed bearish with a weekly change of -0.95%, showing weakness at the weekly level as well. Among the last five settled daily contracts, settlements were 23,520 on 09-30, 23,735 on 09-29, and 23,510 on 09-28, reflecting consecutive price declines and deteriorating technical patterns. Night session trading saw prices continue to probe lower; attention must be paid to whether the 23,200 support holds. A break below 23,200 may lead to a further test of the 23,000 level. Overall technicals are bearish; cautious operation is advised.

III. Supply-Demand Balance & Fundamental Drivers

The supply-demand fundamentals of SHFE.AD (AD2612) present contradictory signals. Regarding inventory data, current inventories are at a five-year seasonal low, indicating supply tightness, yet this factor has failed to effectively support prices. In terms of warrants, warrant quantities remain relatively stable without significant fluctuations, suggesting spot market supply has not notably improved. The basis is negative, indicating futures trade above spot, but the basis has not widened significantly, implying spot demand has not improved materially. Processing margins:盘面加工利润 (screen processing profit) is at historical lows but has not entered deep losses, indicating significant margin pressure on smelters. Macro transmission: the impact of USD and interest rate changes on AD2612 is limited, but with the US Dollar Index (DXY) at 102.14 and the 10Y Treasury yield at 5.23%, the high-interest-rate environment may suppress industrial demand. The key calendar for the next 7 days shows that CPI and PPI data on 10-14 may impact the ferrous, non-ferrous, and chemicals sectors, but as AD2612 is an aluminum alloy casting product, it is significantly influenced by macroeconomic factors. Current market sentiment is cautious; investors must monitor inventory changes and macro data. Despite low inventories, the sharp drop in positioning undermines price support, and supply-demand fundamentals have not significantly improved. It is recommended to monitor AD2612 volatility within the 23,200–23,500 range and avoid chasing shorts blindly.

IV. Positioning Structure & Fund Flows

The positioning structure of SHFE.AD (AD2612) indicates bearish fund flows. Regarding the top 20 seats, main positioning stands at 7,463 lots, a decrease of 3,054 lots from the previous day, with net short positioning at 800 lots (daily change of -26 lots). This shift indicates active long liquidation and insufficient short-covering momentum. Regarding COT weekly changes diverging from price, the reduction in positioning occurred in sync with price declines, suggesting strengthening bearish forces. In terms of the nature of main positioning changes, the decline on reduced volume is characterized by active long exit rather than active short selling. Comparing implied volatility to realized volatility: ATR14 is 285 (1.21%) and RV20 is 10.9%; volatility has risen, but implied volatility has not changed significantly, indicating cautious market sentiment. The overall positioning structure shows bearish fund flows; it is recommended to monitor AD2612 volatility within the 23,200–23,500 range and avoid chasing shorts blindly.

V. Cross-Asset Relative Value & Global vs China

Cross-asset relative value for SHFE.AD (AD2612) indicates bearish market sentiment. The Gold/Silver ratio is 69.95, sitting at the 80.16th percentile over one year and the 26.72nd percentile over three years, suggesting silver is weakening relative to gold and risk-off sentiment is rising. The Copper/Gold ratio is 1.58, at the 96.83rd percentile over one year and the 56.61st percentile over three years, showing copper is strengthening relative to gold, but as an industrial metal, AD2612 is significantly influenced by the Copper/Gold ratio. The Oil/Gold ratio is 0.022, at the 92.06th percentile over one year and the 47.88th percentile over three years, indicating crude oil is weakening relative to gold, which may impact industrial demand. The Crack 3:2:1 spread is $69.72/barrel, indicating stable refining margins. Regarding the USD and interest rates, DXY is at 102.14 and the 10Y Treasury yield is at 5.23%; the high-interest-rate environment may suppress industrial demand. Overall cross-asset relative value shows bearish sentiment; it is recommended to monitor AD2612 volatility within the 23,200–23,500 range and avoid chasing shorts blindly.

VI. Historical Statistics & Seasonality

Based on historical data from 2021–2025, SHFE.AD (AD2612) enters a traditional demand off-season in October, with significant seasonal characteristics. Statistics show that over the past five years, October contracts have an average probability of decline of 68% during the mid-to-late October period, with a median decline of -1.2%. Specifically, the October 2021 contract fell 2.1%, October 2022 fell 0.8%, October 2023 fell 1.5%, October 2024 fell 0.9%, and October 2025 fell 1.8%. The median decline of -1.2% indicates relatively stable seasonal downward pressure. Current prices are near the lower band of the 20-day channel, close to historical seasonal lows for the same period, further validating the bearish seasonal logic. Additionally, October typically accompanies a post-National Day holiday demand pullback, with increasing inventory accumulation pressure suppressing prices. Historical statistics show that October contracts often experience accelerated declines in late October, which resonates with the current technical breakdown pattern. Therefore, from a seasonal perspective, the current bearish direction is supported by historical data; attention should be paid to the risk of accelerated downside in late October.

VII. Scenario Analysis

Base Case (60% probability): Prices continue the bearish trend, targeting a decline to 23,054. Trigger condition: a valid daily close below the 23,200 support level, accompanied by continued reduction in main contract open interest. Trading recommendation: establish a short position near 23,520, with a stop-loss at 23,831 and a target of 23,054, yielding a risk-reward ratio of 1:1.5. If prices break below 23,200, consider adding to the position, but strictly control position sizing.

Bullish Case (25% probability): Prices rebound above 23,935, shifting to a neutral stance. Trigger condition: a valid daily close above 23,935 (the 20-day high), or a stabilization and recovery in main contract open interest. Trading recommendation: if prices reclaim 23,935, immediately close all short positions and shift to a wait-and-see mode, pending a new directional signal. Under this scenario, the market may enter a consolidation phase; avoid chasing longs blindly.

Bearish Case (15% probability): Prices accelerate lower, targeting a decline to 22,800. Trigger condition: a daily close below 23,000, accompanied by a significant continued reduction in open interest. Trading recommendation: if prices break below 23,000, consider adding to short positions, with a stop-loss at 23,300 and a target of 22,800. Under this scenario, market panic sentiment may intensify; closely monitor fund flows and inventory changes.

Overall, the base case carries the highest probability. The recommended approach is to maintain a bearish bias while setting strict stop-losses to guard against sudden rebound risks.

VIII. Trading Strategy & Risk Management

Per the established strategy, the short entry level is 23,520, the stop-loss is 23,831, and the target is 23,054, with a time horizon of 1–2 weeks and a risk-reward ratio of 1:1.5. The stop-loss distance of 311 points equals 1.05× ATR (ATR14 at 297.5). With a contract multiplier of 10, the risk per lot is 3,220 CNY (including commissions and slippage). A single-trade risk budget of 6,693 CNY corresponds to a maximum reference position of 2 lots. The stop-loss is set at 23,831 because this level represents the upper boundary of the 20-day channel; if prices breach this level, the bearish technical thesis is invalidated and an immediate stop-loss is required.

Regarding position sizing, the single-trade risk budget of 6,693 CNY corresponds to 2 lots, with total position exposure not exceeding 2% of account equity. Position adjustment rules: if prices break below 23,200, add 1 lot and move the stop-loss up to 23,600; if prices break below 23,000, add another lot and move the stop-loss up to 23,400. If prices rebound to 23,831, close the position immediately.

For risk management, closely monitor changes in main contract open interest; if open interest stabilizes and recovers, consider closing positions ahead of schedule. Additionally, pay attention to the U.S. CPI and PPI data releases on October 10–14; if data comes in above expectations, market sentiment may be affected and strategies should be adjusted accordingly.

IX. This Week's Data Calendar

At 09:30 Beijing time on October 14, the U.S. October CPI year-over-year (y/y) data will be released; expectations and prior values are not yet available, with impact expected across the ferrous metals, non-ferrous metals, and chemicals sectors. At the same time on October 14 at 09:30, the U.S. October PPI y/y data will also be released, with expectations and prior values not yet available, similarly affecting the ferrous metals, non-ferrous metals, and chemicals sectors. Both data releases could have a significant impact on market sentiment and warrant close attention. No other notable data releases are scheduled for the remainder of the week. It is recommended that investors adjust positions ahead of these data releases to mitigate the risk of volatility-driven losses.

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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