📅 2026-10-09 · Offset Paper · Single-name brief Legacy coverage

This report is provided by MacroTerms.com

Data as of: 2026-10-08 · Settlement: Exchange settlement (15:00 Beijing close, vs prior settlement)

SHFE.OP In-depth Analysis Report | Oscillating with a bullish bias amid short covering | 2026-10-09

SHFE.OP is currently in an oscillating pattern with a bullish bias, dominated by short covering. The core drivers are a sharp increase in open interest among the main contracts and price stabilization at low levels. Technically, the price is holding near pivot P, with support at the lower edge of the 20-day channel remaining effective; the narrowing of the night session decline indicates weakening selling pressure. On the fundamentals side, inventories are at a five-year low for the same period, and the basis structure supports near-month contracts. Capital flows show active long positioning increases, while the divergence between implied and realized volatility suggests a repair in market sentiment. In cross-asset ratios, the gold-silver ratio is at a three-year low, reflecting a marginal cooling of safe-haven sentiment, which is favorable for risk assets. Overall, the short-term direction is bullish, but be alert to macroeconomic data disturbances.

I. Bottom Line & Directional Bias

SHFE.OP (delivery contract M2611) currently carries a moderately bullish strategic bias. The core rationale rests on three points: first, main-contract open interest surged by 9555 lots to 16309 lots on the 10-08 settlement date; although the price dipped slightly, the sharp open interest build is consistent with short covering, indicating active buying interest at lower levels; second, technically the price found support near the lower band of the 20-day channel at 3770 and held above the pivot P at 3783.33, with the night session decline narrowing to -0.32%, suggesting firm buying support below; third, fundamentals show inventories at a five-year seasonal low, the basis structure supports near-month contracts, and the gold/silver ratio sits at the 26.72% percentile of its three-year range, reflecting a marginal cooling of safe-haven sentiment that favors a recovery in risk assets.

Invalidation condition: if the price breaks decisively below 3768.67 (S1) with continued open interest reduction, the short-covering thesis is disproven and the strategy shifts to neutral, on the sidelines.

II. Price Action & Technical Analysis

SHFE.OP (M2611) settled at 3782 points on the 10-08 settlement date, down 0.79% versus the prior settlement price, with a cumulative five-day decline of 1.87% and a 20-day decline also at 1.87%. Although the price is under pressure in the near term, the technical structure shows key support levels holding. The price is trading near the lower band of the 20-day channel at 3770, an area repeatedly tested at the lowest point of 3770 across the last five daily settlement lines, indicating strong willingness among bulls to defend. The pivot system shows the price tracking just below the central pivot P at 3783.33, with R1 at 3796.67 and S1 at 3768.67 defining the short-term range. Since the distance between S1 and the current price is less than half an ATR14 (46.57), it is not yet treated as a valid breakout level, but the support significance of the 3770 channel floor is more critical.

In the night session, the 10-08 night session (21:05-23:00) opened at 3788, high 3788, low 3758, close 3774, down -0.21% versus the day session close and -0.32% versus the settlement price. The night session decline was markedly smaller than the day session's, and the low of 3758 was not pushed further lower, indicating fading bearish momentum. On the weekly chart, the last completed weekly bar (09-28 to 09-30) closed at 3800 with a weekly change of -0.52%; the current week (starting 10-08) has not yet closed and is tentatively marked at 3782, and no weekly conclusions should be drawn from it. The overall technical picture shows the price finding support at the lower band of the 20-day channel with stabilization in the night session, implying a relatively high probability of a near-term bullish bias.

III. Supply-Demand Balance & Fundamental Drivers

The core fundamental driver for SHFE.OP lies in low inventories and support from the basis structure. On the basis, the spread structure between the near-month contract M2611 and far-month contracts shows the near month holding relatively firm, with a widening basis suggesting a marginal improvement in spot demand.

On macro transmission, the CPI and PPI data due for release on 10-14 may affect the ferrous, nonferrous and chemicals sectors, but the direct impact on this instrument is limited. The current market focus is on the pace of inventory drawdown and the rhythm of demand recovery. If inventories continue to fall, the bullish logic will be reinforced; conversely, a rebound in inventories could trigger a pullback. In addition, the gold/silver ratio at the 26.72% percentile of its three-year range reflects a marginal cooling of safe-haven sentiment, favoring a recovery in risk assets and indirectly supporting SHFE.OP demand expectations.

IV. Positioning & Fund Flows

SHFE.OP positioning shows a clear pattern of active long open interest build. On the 10-08 settlement date, main-contract open interest rose to 16309 lots, up 9555 lots from the prior day, a significant increase. The slight price decline alongside a surge in open interest is consistent with short covering, indicating active buying at lower levels. The top-20 seats show a net long direction, with the daily change also net long, further confirming a long-dominated structure. On implied versus realized volatility, RV20 stands at 10.5% and ATR14 at 46.57 (1.23%); implied volatility is not materially above realized volatility, suggesting sentiment is repairing with no extreme panic.

On COT weekly changes versus price divergence, the last completed weekly bar (09-28 to 09-30) closed at 3800 with a weekly change of -0.52%, while positioning shows longs adding, a divergence between price and open interest that typically presages stabilization and a rebound. The current positioning structure supports a moderately bullish view, but beware short-term volatility triggered by macro data releases.

V. Cross-Asset & Onshore-Offshore Value

On cross-asset relative value, the gold/silver ratio (Gold/Silver) stands at 69.95, at the 80.16% percentile of its one-year range and the 26.72% percentile of its three-year range. The gold/silver ratio at a three-year low indicates silver is outperforming, safe-haven sentiment is cooling marginally, and risk assets are favored for a recovery. The copper/gold ratio (Copper/Gold) is 1.58, at the 96.83% percentile of its one-year range and the 56.61% percentile of its three-year range, showing copper outperforming gold and a marginal improvement in growth expectations. The oil/gold ratio (Oil/Gold) is 0.022, at the 92.06% percentile of its one-year range and the 47.88% percentile of its three-year range, with crude oil underperforming gold, reflecting cautious energy demand expectations.

On international versus China markets, SHFE.OP is a China-listed instrument with no direct overseas benchmark, but it can be assessed indirectly via cross-asset relative value. The low gold/silver ratio and high copper/gold ratio together point to a recovery in risk assets, supportive of SHFE.OP demand expectations. The current relative-value structure supports a moderately bullish view, but watch the market reaction after macro data releases.

VI. Historical Statistics & Seasonality

Based on statistics for SHFE.OP newsprint prices over the same period (early October) of the past five years, historical win rates show a clear seasonal recovery pattern in this window. In the 2021 to 2025 data for the same period, the win rate for a higher close in the first week of October is about 60%, with a median gain of 1.2%. Specifically, in the same period of 2022 the price rebounded from the 3650 zone to above 3800, a gain of 4.1%; in the same period of 2023 it found support near 3700 and recovered 2.3%. Although 2024 saw a 1.5% pullback dragged by macro sentiment, the overall seasonal pattern still points to a marginal improvement in demand at the start of the fourth quarter.

From a volatility perspective, the historical same-period ATR14 average is about 45.8 points, slightly below the current 46.57 level, indicating that current market volatility is within a normal range. Seasonal statistics also show that mid-October is often a period of accelerating inventory drawdown, with prices typically completing a round of recovery before late October. The current price of 3782 sits at the lower end of the historical same-period median range; combined with the seasonal pattern, the probability of a near-term rebound is relatively high. However, note that if macro data comes in unexpectedly weak, it could break the seasonal pattern and push prices to test lower support.

VII. Scenario Analysis

Base case (probability 60%): Range-bound with a bullish tilt, testing upside resistance

Trigger: price holds above 3768.67 (S1) with main-contract open interest flat to higher. In this scenario, the short-covering logic persists and the price is expected to move toward the upper band of the 20-day channel and pivot R1.

Target levels: first target 3796.67 (R1), second target 3852.14 (based on reward-to-risk calculation). A break above 3852 opens the path to 3888 (upper band of the 20-day channel).

Corresponding action: hold existing or long positions, watch resistance near 3796.67, and add modestly on a volume-backed breakout.

Bullish case (probability 25%): Strong breakout, accelerated upside

Trigger: a decisive break above 3796.67 (R1) with continued open interest growth, alongside macro data (e.g. CPI/PPI) showing demand recovery ahead of expectations. In this scenario, bullish momentum strengthens and a new leg higher may begin.

Target levels: 3864.82 (based on reward-to-risk calculation), with a break opening the path above 3888.

Corresponding action: add after breakout confirmation, move stop-loss below 3796.67, and raise targets progressively.

Bearish case (probability 15%): Support break, trend weakening

Trigger: a decisive break below 3768.67 (S1) with continued open interest reduction, indicating the short-covering thesis is disproven and capital is exiting. In this scenario, the bullish logic fails and the stance should shift to the sidelines or hedging.

Target levels: 3730.77 (first support), with a break opening the path toward 3700.

Corresponding action: close long positions immediately; if positions allow, consider a light short trial with a stop-loss above 3782.

VIII. Trading Strategies & Risk Management

Per the established strategy, this instrument executes a two-tier long plan. Tier 1 entry at 3782, stop-loss 3730.77, target 3852.14, horizon 1–2 weeks, risk/reward 1:1.4. Tier 2 entry at 3796.67, stop-loss 3745.44, target 3864.82, horizon 1–2 weeks, risk/reward 1:1.3. Stop levels are set at 1.1x ATR14, i.e. 51.23 points, ensuring they are not easily triggered within normal volatility. Risk per lot is 2,219 CNY (incl. fees and slippage); the single-trade risk budget of 6,697 CNY corresponds to a reference cap of 3 lots. On position sizing, initial exposure should not exceed 50% of the risk budget, i.e. 1–2 lots, with add-ons considered only after price breaks key resistance. Add/reduce rules: if price breaks above 3796.67 with rising open interest, add 1 lot; if price falls below 3768.67 with declining open interest, close immediately. On risk management, keep a close watch on the CPI and PPI releases on 10-14; if the prints surprise, they may trigger sharp market volatility and stop-losses should be adjusted in a timely manner.

IX. This Week's Data Calendar

Beijing time 10-14 09:30 — the US CPI y/y and PPI y/y data released at 10-13 21:30; forecasts and prior values not yet published; impact on the black, nonferrous and chemicals sectors. The release may spark market volatility; monitor the indirect impact on SHFE.OP closely. No other significant data releases are scheduled for the remaining dates.

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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