📅 2026-10-08 · SHFE Aluminum · 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 Aluminum Main Continuous (SHFE.AL) Deep Analysis Report | Bearish Breakdown, Target 23350 | 2026-10-08

Direction: Bearish. Core logic: price effectively broke below the 20-day channel lower rail with a significant reduction in open interest, indicating longs are actively exiting and short-term momentum is weakening. Weekly chart closed bearish, pressuring prices. Fundamentals show slow inventory destocking, and narrowing premiums in international and Chinese markets weaken import support. Invalidation condition: daily close back above 23920, or a volume breakout above 24000 in the night session.

I. Core Conclusion & Directional Bias

The current strategic direction is clearly bearish. Based on market performance as of the data cutoff date of 2026-10-08, the SHFE Aluminum Main Continuous contract (AL2611), after a sustained pullback, confirmed a breakdown below the lower boundary of the 20-day channel near the 2026-09-30 settlement price of CNY 23,900/t. The October 8th close further declined to CNY 23,385/t, a drop of 2.15%, confirming a weakening short-term trend. Three core rationales support this assessment: First, from a technical perspective, price retreated from the 24,275 high, consecutively breaking below the 20-day moving average support, and the October 8th closing price fell below the 20-day low of 23,920, forming an effective breakdown with the next target pointing directly at the 23,350 low. Second, fund flows indicate main contract long liquidation driving prices lower; on October 8th, main contract notional positions decreased by CNY 857 million, and the top 20 brokerages' net short positions increased by 6,805 lots, indicating that long funds actively exited while short covering willingness was insufficient. Third, while fundamentals showed minor destocking, LME inventory remained elevated at 238,900 tons, and the international-to-China premium narrowed to -0.81%, with the import window closed, lacking external support. The invalidation condition is set as: if the daily close reclaims above 23,920, or the night session breaks above 24,000 on high volume, the bearish logic is falsified and the stance must shift to neutral observation.

II. Price Action & Technicals

As of the October 8th close, the SHFE Aluminum Main Continuous (AL2611) settled at CNY 23,585/t, down 2.15% from the previous session, with an intraday low of CNY 23,350/t and a high of CNY 23,765/t. From the daily sequence, price has been declining continuously from the September 23rd high of CNY 24,275/t. The October 8th closing price has broken below the lower boundary of the 20-day channel at CNY 23,800/t and is below the 20-day low of CNY 23,920/t, forming an effective breakdown. The 20-day channel range is CNY 23,800–24,675/t; the current price sits 3.4% below the lower channel boundary, indicating strong bearish momentum. ATR14 is CNY 220/t; the current 2.15% decline corresponds to approximately 0.92% intraday volatility, close to the ATR level, suggesting short-term volatility expansion. Pivot P is CNY 23,868.33/t, R1 is CNY 23,936.67/t, and S1 is CNY 23,761.67/t. The current price has broken below S1, with further downside targeting the CNY 23,350/t low. On the weekly chart, the last completed weekly candle (2026-09-28 to 2026-09-30) closed at CNY 23,830/t, a weekly decline of 1.53%, closing bearish and capping short-term rebounds. In the night session, October 8th extended the downtrend, probing CNY 23,350/t, indicating persistent bearish sentiment. The overall technical formation presents a bearish alignment, with a clear short-term target of CNY 23,350/t; a break below could lead to further probing of CNY 23,200/t.

III. Supply-Demand Balance & Fundamental Drivers

At the fundamental level, inventory data shows structural divergence. LME aluminum inventory stands at 238,875 tons (as of 2026-10-07), with a daily change of 0 tons and a cumulative destocking of 5,650 tons over the past 20 periods, indicating slow global inventory drawdown and persistent supply pressure. SHFE aluminum warrants stand at 121,863 tons (as of 2026-09-30), with a daily change of -6,880 tons, a decline of 5.34%, indicating accelerated warrant destocking in China, though the absolute level remains historically elevated. Regarding the basis, the spot basis on October 8th was -CNY 150/t; the discount status reflects weak spot demand. Processing margins remain low, with some capacity facing losses, but overall operating rates have not declined significantly, and supply-side pressure persists. Macro transmission: the US Dollar Index is at 102.14 and US Treasury yields at 5.23%; the high-interest-rate environment suppresses metal demand expectations. CPI and PPI data will be released on October 14th; if inflation exceeds expectations, metal prices may face further pressure. Seasonally, the average decline over the 20 trading days starting from the same date over the past 15 years is -1.67%, with a median of -0.86%, indicating a historically bearish performance. The current supply-demand landscape is characterized by “weak demand and high inventory,” with the destocking pace insufficient to support a price rebound, resulting in a bearish fundamental driver.

IV. Positioning & Fund Flows

Positioning structure shows fund flows clearly skewed to the downside. On October 8th, main contract notional positions were CNY 30.81 billion, a daily change of -CNY 857 million; the decline on reduced open interest indicates that long funds actively exited. The top 20 brokerages' total positions were 427,357 lots, a daily increase of 4,002 lots, comprising 437,703 lots of long positions (up 10,807 lots) and 427,357 lots of short positions (up 4,002 lots), with net short positions at 10,346 lots, an increase of 6,805 lots. The increase in net shorts indicates strengthening bearish forces, while long liquidation exacerbates downward pressure. COT data shows a divergence between weekly position changes and price—price fell while positions increased, indicating that shorts actively added to their positions. Comparing implied volatility with realized volatility, ATR14 is CNY 220/t; current volatility is at elevated levels, and market risk appetite has declined. In terms of fund flows, main contract liquidation on the downside with insufficient short covering indicates bearish market sentiment. The overall positioning structure supports the bearish view; if shorts continue to add, prices may probe further lower.

V. Cross-Asset Relative Value & Global vs China

Cross-asset relative value indicates the metals complex is broadly weak. The Gold/Silver ratio is 69.95, at the 80.16th percentile of the 1-year range and the 26.72nd percentile of the 3-year range, showing gold outperforming silver and rising safe-haven sentiment. The Copper/Gold ratio is 1.58, at the 96.83rd percentile of the 1-year range and the 56.61st percentile of the 3-year range, showing copper underperforming gold and weak economic expectations. The Oil/Gold ratio is 0.022, at the 92.06th percentile of the 1-year range and the 47.88th percentile of the 3-year range, showing oil underperforming gold and weak energy demand expectations. The crack spread is USD 69.72/bbl, reflecting acceptable refining margins, but overall commodity demand expectations are weak. Regarding international vs. China market spreads, the SHFE vs. LME aluminum premium is -0.81% (as of 2026-09-30), compared to -1.7% five days prior, showing Chinese aluminum prices trading at a discount to international markets, with the import window closed and lacking external support. The US Dollar Index at 102.14 and US Treasury yields at 5.23% suppress metal prices under the high-interest-rate environment. Overall cross-asset relative value shows the metals complex broadly weak, with narrowing international-to-China premiums and a closed import window further pressuring Chinese aluminum prices.

VI. Historical Statistics & Seasonality

Based on historical statistics over the 20 trading days starting from the same date across the past 15 years, the SHFE Aluminum Main Continuous exhibits a distinctly bearish seasonal characteristic around October 8th. The sample period covers 2012 to 2026, with statistics showing an average return of -1.67% and a median return of -0.86% for this period, indicating a high probability of price declines during the same historical period. Out of the 15-year sample, there were only 6 up years and 9 down years, yielding an up-year win rate of merely 40%, further reinforcing the dominance of seasonal bearish factors. Specifically regarding extreme moves, the best performance occurred in the same period of 2016 with a gain of +6.04%, primarily driven by supply-side reform expectations and demand recovery resonance at that time; the worst performance occurred in the same period of 2021 with a decline of -17.91%, caused by the superimposition of global supply chain disruptions and surging energy costs. Currently, on October 8, 2026, price has broken below the 20-day low of CNY 23,920/t and sits 3.4% below the lower boundary of the 20-day channel, closely aligning with the historical seasonal average decline of -1.67% and the median of -0.86%. Seasonal statistics indicate that in the absence of major macro tailwinds or sudden supply-side contractions, early-to-mid October is often a seasonal pullback window for aluminum prices. The current technical breakdown and seasonal bearishness form a resonance, reinforcing the short-term bearish judgment. Historical data also shows that if price fails to effectively hold above CNY 23,920/t, seasonal downward momentum may extend into mid-October, with the target range shifting down to near CNY 23,350/t, overlapping with historical low zones. Therefore, seasonal statistics provide historical probability support for the current bearish strategy, and investors should pay attention to the potential impact of seasonal patterns on price action.

VII. Scenario Analysis

Based on the current technical breakdown and fund flows, we construct three scenarios—base, bullish, and bearish—with probability allocations of 60% base, 25% bearish, and 15% bullish, totaling 100%.

Base Scenario: Price continues the bearish trend. Core logic: daily close broke below the 20-day low of 23,920 CNY/t and failed to reclaim it effectively, sustaining bearish momentum. Trigger condition: the October 8 closing price of 23,385 CNY/t confirms a breakdown of key support, with no volume breakout above 24,000 in the night session. Target: 23,450 CNY/t (corresponding to a risk-reward ratio of 1:1.5); if breached, further downside to the 23,350 CNY/t low. Trade recommendation: maintain existing short positions, stop-loss at 24,089.7 CNY/t (1.1× ATR), target 23,450 CNY/t, horizon 1–2 weeks.

Bearish Scenario: If macro data beats expectations or inventory destocking disappoints, price accelerates lower. Trigger condition: daily close breaks below 23,350 CNY/t with open interest continuing to build. Target: 23,200 CNY/t. Corresponding action: add to short positions, stop-loss moved up above 23,830 CNY/t, target 23,200 CNY/t, horizon 1 week.

Bullish Scenario: If price reclaims the 23,920 level or the night session sees a volume breakout above 24,000, the bearish thesis is invalidated. Trigger condition: daily close reclaims above 23,920 CNY/t, or a volume breakout above 24,000 in the night session. Target: 24,000 CNY/t. Corresponding action: close short positions and stand aside, stop-loss above 24,089.7 CNY/t, target 24,000 CNY/t, horizon 3–5 days.

The probability allocation across the three scenarios is based on the current degree of technical breakdown and fund flows. The base scenario carries the highest probability, as price has confirmed a break of key support with short-side position building. The bearish scenario is second, contingent on macro data catalysts. The bullish scenario carries the lowest probability, requiring a strong bullish engulfing reversal. Investors should closely monitor the key levels at 23,920 and 24,000, and dynamically adjust strategies.

VIII. Trading Strategy & Risk Management

The established strategy is short, with an entry price of 23,830 CNY/t, stop-loss at 24,089.7 CNY/t, and targets of 23,450 CNY/t (horizon 1–2 weeks) and 23,440 CNY/t (horizon 1–5 days), both yielding a risk-reward ratio of 1:1.5. The stop-loss distance is 259.7 CNY, equal to 1.1× ATR (ATR14 = 236.07), with a contract multiplier of 5, resulting in a per-lot risk of 1,359 CNY (including commissions and slippage). A single-trade risk budget of 6,693 CNY corresponds to a reference maximum of 4 lots. The stop-loss is set at 24,089.7 CNY/t, as this level sits above 1.1× ATR, ensuring it is not triggered during normal volatility while covering potential gap risk. Position sizing is calculated based on the single-trade risk budget of 6,693 CNY and the per-lot risk of 1,359 CNY, with a cap of 4 lots, ensuring that the loss on any single trade does not exceed 1% of total capital.

Add/Reduce Rules: If price breaks below 23,450 CNY/t with rising open interest, add 1 lot and move the stop-loss up to 23,830 CNY/t. If price rebounds to 24,000 CNY/t without a volume breakout, reduce position by 50%. All risk calculations strictly reference program output: stop-loss distance of 259.7 CNY, ATR multiple of 1.1, per-lot risk of 1,359 CNY, single-trade risk budget of 6,693 CNY, and reference cap of 4 lots—none may be recalculated independently. Strategy horizon is 1–2 weeks or 1–5 days, adjusted according to market volatility. If entry conditions are not triggered, remain on the sidelines and wait for a daily close reclaiming above 23,920 CNY/t or a volume breakout above 24,000 in the night session before making any decisions.

IX. This Week's Data Calendar

This data has the potential to trigger market volatility; if inflation comes in above expectations, it may further pressure metals prices. Investors should closely monitor the market reaction following data releases and adjust position strategies accordingly. No other events are scheduled; recommend focusing on price direction changes following data releases.

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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