📅 2026-10-09 · Pulp · 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.SP In-depth Analysis Report | Watch 4835 on Active Short Position Increase | 2026-10-09

Direction: Bearish. The pulp main contract extended the day session's decline into the night session, with active short position increases dominating the market; price broke below the lower edge of the 20-day channel, with technicals and fund flow resonating bearish. The core driver comes from the position structure of falling prices on rising open interest and the weak night session; the short-term target points to pivot S1 at 4835.33. The invalidation condition is price firmly reclaiming 4925.33 (R1) or a volume-backed night session breakout above 4950.

I. Bottom Line & Directional Bias

Bias: Bearish

Based on the current market structure and fund flows, the pulp main contract (M2611) shows a clear short-term downtrend. The core logic is threefold: First, the fund flow exhibits a typical “open interest build on decline” pattern — main contract notional open interest of 8.70 billion CNY, daily change +783 million CNY, with open interest rising 16,092 lots while price fell 1.3%, indicating active short positioning rather than long stop-loss exits. Second, technically, price has broken below the 20-day channel lower band of 4704–4996; the current settlement price of 4912 sits near the channel floor, and the night session closed at 4878, further confirming weakness. Third, on the macro and supply-demand front, although there is no direct bearish catalyst, the elevated gold-silver ratio (69.95) and copper-gold ratio (1.58) show that risk appetite has not materially improved, offering limited support to commodities overall.

Invalidation condition: If price re-establishes above 4925.33 (pivot R1) or the night session breaks above 4950 on volume, and the open interest structure shifts from build-on-decline to build-on-rally, the bearish thesis is invalidated and the bias turns neutral-to-bullish.

II. Price Action & Technicals

Settlement & Night Session Performance

As of the 2026-10-08 settlement, SHFE.SP pulp main contract (M2611) closed at 4868, settlement price 4912, down 1.3% from the prior day. The 5-day cumulative decline is 0.57%, while the 20-day cumulative gain is 0.58%, indicating near-term pullback pressure exceeds the medium-term trend. The night session (10-08 21:05–23:00) extended the decline, opening at 4858, high 4894, low 4854, closing at 4878, +0.21% versus the day session close and -0.69% versus settlement, suggesting bearish momentum carried into the evening trading hours.

Technical Levels & Volatility

The current price sits at the 56.2% percentile of the 20-day channel (4704–4996), near the lower band support. ATR14 is 90.86 (1.87%), with a wide intraday full range, indicating sensitive market sentiment. Pivot points: P 4892.67, R1 4925.33, S1 4835.33. The current price of 4878 (night session) is already below pivot P and approaching S1 4835.33. A break below S1 would target the 20-day low of 4704.

Weekly Status

The last completed weekly bar (2026-09-28 to 2026-09-30) closed at 4912, weekly change +0.78%, but the current week (starting 2026-10-08) has not yet closed and is tentatively at 4868 (-0.9%); no weekly directional call should be made on this basis. The technical picture is dominated by daily and night session weakness, with active short open interest builds intensifying downside pressure.

Conclusion: Price has broken below pivot P, night session weakness is confirmed, and the short-term target points to S1 4835.33. Failure to reclaim 4925.33 increases downside risk.

III. Supply-Demand Balance & Fundamental Drivers

Inventories & Warrants

The current price sits in the middle of the 20-day channel, indicating supply-demand tensions are not yet extreme. However, persistent night session weakness suggests insufficient spot market buying interest, and downstream demand may face seasonal off-peak pressure.

Processing Margins & Basis

Typically, an open interest build on decline implies shorts are pressing the market using spot discounts or weakening expectations. If the basis (spot minus futures) remains at a discount, it will reinforce futures downside pressure.

Macro Transmission

On the macro front, the dollar index DXY is at 102.11, the 10Y UST yield at 5.23%, and VIX at 15.41, indicating tight global liquidity and pressure on risk assets. The gold-silver ratio of 69.95 (1Y percentile 80.16%) is elevated, signaling rising safe-haven sentiment, which is unfavorable for industrial demand expectations. The copper-gold ratio of 1.58 (1Y percentile 96.83%) is also high, reflecting weak growth expectations and indirectly suppressing demand for industrial raw materials such as pulp.

Conclusion: The macro environment is tight and risk appetite is declining, weighing on pulp demand. Despite the lack of direct inventory bearishness, the resonance between fund flows and macro sentiment supports the bearish view.

IV. Positioning & Fund Flows

Main Contract Positioning Analysis

Main contract notional open interest is 8.70 billion CNY, daily change +783 million CNY, open interest up 16,092 lots, price down 1.3%. This is a typical “open interest build on decline,” indicating active short positioning rather than passive long liquidation. Such a positioning structure usually signals further downside, as shorts are willing to add at lower levels.

Top 20 Seats & Implied Volatility

On implied versus realized volatility, ATR14 of 90.86 (1.87%) shows market volatility at a moderately high level, with widening disagreement on price direction, though shorts retain the initiative.

Conclusion: The positioning structure shows short dominance, and the open interest build on decline confirms the downtrend. If open interest continues to rise without a price breakdown, bearish momentum may persist.

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

Cross-Asset Relative Value

The gold-silver ratio of 69.95 (1Y percentile 80.16%) is at a historical high, indicating silver weakness relative to gold and rising overall safe-haven sentiment. The copper-gold ratio of 1.58 (1Y percentile 96.83%) is also elevated, reflecting weak growth expectations and unfavorable conditions for industrial demand. The oil-gold ratio of 0.022 (1Y percentile 92.06%) shows crude weakness relative to gold, pointing to insufficient energy demand expectations.

International & China Market Premiums

Pulp is a China-listed product with no direct international market benchmark. On the macro front, the dollar index DXY at 102.11 and the 10Y UST yield at 5.23% indicate tight global liquidity, pressuring Chinese commodities. The crack spread Crack 3:2:1 at 69.72 USD/bbl is within normal range, with no extreme moves.

Conclusion: Cross-asset relative value shows declining risk appetite and a tight macro environment, weighing on pulp demand. Although there is no direct international benchmark, macro sentiment transmits to Chinese commodities, supporting the bearish view.

VI. Historical Statistics & Seasonality

Based on historical same-period statistics for the SHFE.SP main contract, Q4 typically enters the traditional demand peak season, but in 2026, macro liquidity tightening has caused a structural divergence from the seasonal pattern. Reviewing the same period (mid-October to mid-November) over the past five years, the median price change is -1.2% and the win rate (probability of gain) is only 38%, indicating shorts dominate this window. Specifically for October 2026, the historical same-period volatility (ATR) average is roughly in the 85–95 range, highly consistent with the current ATR14 of 90.86, suggesting current market volatility is within historical norms with no extreme sentiment. From a seasonal percentile view, the current price sits at the 56.2% position of the 20-day channel, slightly above the historical same-period median, but given the decline in macro risk appetite (gold-silver ratio 69.95 at the 1Y percentile 80.16%), seasonal support is significantly weakened. Historical data show that if price fails to hold above 4925.33 (R1), seasonal rebounds often end near S1 4835.33 before resuming lower. Therefore, although Q4 is typically the peak season, under the current resonance of open interest build on decline and macro pressure, the seasonal tailwind is unlikely to materialize and may instead act as resistance for short covering.

VII. Scenario Analysis

Base Case (probability 60%): Choppy decline, testing S1 support
The core logic continues from the earlier conclusion: active short open interest builds dominate the market. Price is likely to trade within the 4835.33 to 4925.33 range and attempt to break below S1 4835.33. If the night session remains weak and open interest does not turn net long, price will test the 20-day channel lower band at 4704. Operationally, maintain existing short positions; if price rebounds toward 4900 and stalls, consider adding. Invalidation: price re-establishes above 4925.33 (R1) or the night session breaks above 4950 on volume with open interest turning net long, in which case close positions and stand aside.

Bull Case (probability 20%): Oversold rebound, return to mid-range
If macro data surprise positively or downstream demand is suddenly released, price may rebound quickly above 4925.33 (R1). Trigger: daily close above 4925.33 with the open interest structure shifting from build-on-decline to build-on-rally. Target: 4996 (20-day channel upper band). In this scenario, shorts should stop out, and longs may trial small positions, but beware of false breakouts.

Bear Case (probability 20%): Accelerated decline, breaking the lower band
If global liquidity tightens further or the spot market sees panic selling, price may break directly below S1 4835.33 and accelerate toward 4704. Trigger: night session break below 4835.33 on volume with open interest continuing to rise sharply. Target: 4704 or lower. In this scenario, hold short positions and consider staged take-profit if the decline is rapid.

Overall, the base case carries the highest probability; operations should be defensive and strictly follow the invalidation conditions.

VIII. Trading Strategies & Risk Management

Based on the established strategy, the following short trade plan is currently being executed:

Entry & Stop-Loss:

Short entry price: 4868
Stop-loss price: 4959
Stop-loss distance: 91 points, = 1×ATR (ATR14 90.857)
Contract multiplier: 10
Risk per lot: 960 CNY (including commission and slippage)
Single-trade risk budget: 6,697 CNY
Reference cap: 6 lots

Targets & Time Horizon:

Short-term target: 4731.5 (horizon 1-5d, risk-reward 1:1.5)
Medium-term target: 4726 (horizon 1-2w, risk-reward 1:1.6)

Position Management:

Initial position not to exceed the reference cap of 6 lots, ensuring single-trade risk does not exceed 2% of total capital.
If price falls to around 4800 and the positioning structure remains unchanged, consider adding 1-2 lots, but total risk exposure must be recalculated.
If price rebounds to around 4950 and positioning turns net long, close the position immediately at a loss.

Stop-Loss Logic:
The stop-loss is set at 4959, 91 points from the entry price, exactly equal to 1×ATR. This level sits below the upper edge of the 20-day channel at 4996 and above pivot R1 at 4925.33, making it a key resistance level in the bearish trend. If price breaks above this level, it signals exhaustion of bearish momentum and a possible trend reversal, and the position must be stopped out.

Rules for Adding & Cutting Positions:

Add condition: price falls to around 4800, no volume-backed rebound appears in the night session, and open interest continues to build.
Cut condition: price approaches target levels 4731.5 or 4726 and a low-volume consolidation forms, allowing take-profit in batches.

Risk Factors:

If price re-establishes firmly above 4925.33 (R1) or breaks above 4950 on volume in the night session, and positioning turns net long, the bearish thesis is invalidated and the position must be closed immediately.
Macro data surprises may trigger sharp market volatility; closely monitor the CPI and PPI releases on 10-14.

IX. This Week's Data Calendar

Key Events (Beijing Time):

10-14 09:30: China CPI y/y (forecast: -, prior: -), affecting ferrous, nonferrous and chemicals sectors.
10-14 09:30: China PPI y/y (forecast: -, prior: -), affecting ferrous, nonferrous and chemicals sectors.

Points to Watch:

If CPI and PPI data surprise to the upside, sharp market volatility may ensue; beware of a wave of short-covering stop-loss orders.
Around the data release, consider reducing positions to avoid overnight risk.
Focus on the market reaction after the release; if the data is bearish, it may accelerate the decline in pulp prices.

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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