📅 2026-10-09 · Stainless Steel · 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 Stainless Steel Main Continuous (SHFE.SS) In-depth Analysis Report | Bears in control, watch 13360 support | 2026-10-09

The current stainless steel main continuous (M2611) trend is bearish, with the core drivers being weakening demand expectations and lower cost support; technically, the key pivot has been broken. As of the 2026-10-08 settlement, the price closed at 13525, down 2.78% over 5 days and down 2.25% over 20 days, with the night session continuing the weakness. The invalidation condition for the direction is the price effectively holding above 13610 (R1) accompanied by a sharp reduction in open interest; otherwise, short-term downside risk remains.

I. Bottom Line & Directional Bias

The current SHFE Stainless Steel main continuous contract (executed contract M2611) shows a clear bearish trend. The core logic rests on three points: first, demand expectations on the fundamental side are weakening; while there is no direct macro headwind, sentiment across the black complex is suppressed, leaving stainless steel, as a downstream extension, under pressure; second, cost-side support is loosening, with nickel pig iron and scrap steel prices showing no meaningful rebound, leaving stainless steel processing margins at low levels but lacking upward drivers; finally, the technical structure has broken down, with prices having fallen below the lower edge of the 20-day channel and key pivot support, and the night session extending the decline, with clear signs of active open interest build by shorts.

Direction invalidation condition: if prices can hold above 13610 (R1) for two consecutive sessions, and main-contract open interest shows a significant decline (short covering), the near-term bearish thesis would be invalidated, shifting to a range-bound or rebound. The current strategy is to sell into strength, targeting 13360 (S1) and below.

It should be emphasized that this report is based solely on 2026-10-08 settlement data and the first half of the 10-09 night session; markets change rapidly, so strict stop-loss discipline is required.

II. Price Action & Technicals

As of the 2026-10-08 settlement, SHFE Stainless Steel main continuous (M2611) closed at 13455, with a settlement price of 13525, down 1.82% from the previous trading day. In terms of short-term trend, the 5-day decline reached 2.78% and the 20-day decline was 2.25%, indicating that bears have dominated recently. The current price sits in the lower region of the 20-day channel (13290–13945), at only the 25.2% position, suggesting prices are approaching the lower band support, but no effective stabilization signal has yet appeared.

On volatility, ATR14 is 173.57 (1.29%), with a wide intraday full range, and RV20 is 10.7%, indicating a rather sensitive market. Pivot analysis shows the central pivot P at 13515, resistance R1 at 13610, and support S1 at 13360. The current settlement price of 13525 is slightly above P, but the night session (10-08 21:05–10-09 01:00) opened at 13495, dipped to a low of 13455, and closed at 13515, up a marginal 0.45% versus the day session close but still down 0.07% versus the settlement price, showing a lackluster night-session rebound with bears still in control.

On the weekly chart, the last completed weekly candle (2026-09-28–2026-09-30) closed at 13700, down 0.83% on the week. This week (starting 2026-10-08) has not yet closed and is tentatively at 13455 (-1.79%), but the weekly pattern cannot be judged on that basis. Technically, prices have broken below the 20-day moving average, and indicators such as MACD have not produced a golden cross, so the short-term bearish trend remains intact. If prices break further below 13360 (S1), downside space may open toward 13290 (the lower edge of the 20-day channel).

In summary, the technicals are bearish; watch the validity of the 13360 support, and if it fails, expect an accelerated decline.

III. Supply-Demand Balance & Fundamental Drivers

Stainless steel fundamentals are driven mainly by weakening demand expectations and insufficient cost-side support. From an inventory perspective, as of 2026-10-08, social inventories were not disclosed directly, but given the slow destocking across the black complex recently, stainless steel inventory pressure persists. On warehouse warrants, SHFE warrant volumes have not shown a significant decline, indicating that spot-market selling pressure remains.

On the basis, stainless steel futures are currently at a discount to spot, but the discount has not widened significantly, suggesting no panic selling in the spot market, though weak demand makes basis repair difficult. On processing margins, stainless steel paper processing margins are at historical lows, but constrained by nickel price volatility and scrap steel prices, mills have limited room for margin recovery and subdued production incentives; however, no large-scale production cuts have emerged, so the supply side still maintains some pressure.

On macro transmission, although CPI and PPI data will be released on October 14, the market is currently more focused on overall demand expectations for the black complex. Real estate policy has eased, but transmission to stainless steel demand will take time. In addition, the US Dollar Index (DXY) is holding at 102.11, exerting some suppression on commodities, though the impact is relatively mild. Overall, the supply-demand balance still shows a surplus pattern, and fundamental drivers are bearish.

Note that if upcoming macro data beat expectations or major policy bullish emerge, demand expectations could be boosted in the short term, but current fundamentals do not support a significant rebound.

IV. Positioning & Fund Flows

Positioning data show main-contract nominal open interest reached CNY 600m+, with a daily change of +CNY 798m, open interest up 11,859 lots, and prices down 1.82%, a classic open-interest-build decline, indicating active short building and passive long reduction. On the top-20 seats, while specific seat changes were not disclosed directly, the overall open interest increase alongside falling prices suggests concentrated short strength.

On COT data, the weekly change shows no obvious divergence from price, but the recent open interest build has coincided with price declines, confirming shorts dominate the market. On implied versus realized volatility, RV20 is 10.7% and ATR14 is 173.57, indicating volatility is at a moderate level with no extreme moves, though night-session volatility has intensified, suggesting greater divergence among capital on the short-term direction.

On fund flows, main-contract nominal open interest rose while prices fell, indicating capital is flowing mainly into shorts. If open interest continues to rise and prices break below 13360, the bearish trend may accelerate. Conversely, if open interest declines and prices rebound, it may signal short covering and a trend reversal.

In summary, the positioning structure is bearish and fund flows support the shorts, but be wary of short-term rebound risk from short covering.

V. Cross-Asset Relative Value & Global vs China

On cross-asset relative value, the Gold/Silver ratio stands at 69.95, at the 80.16th percentile over 1Y and the 26.72nd percentile over 3Y, indicating gold has strengthened relative to silver, though silver is relatively stronger over the longer term. The Copper/Gold ratio is 1.58, at the 96.83rd percentile over 1Y and the 56.61st percentile over 3Y, indicating copper has strengthened relative to gold, reflecting growth expectations. The Oil/Gold ratio is 0.022, at the 92.06th percentile over 1Y and the 47.88th percentile over 3Y, showing crude oil has strengthened relative to gold, with energy demand expectations still reasonable.

On global vs China relative value, stainless steel, as a China-based product, is driven mainly by China's supply-demand balance but is heavily influenced by international nickel prices. The DXY at 102.11 exerts some suppression on commodities, though the impact is relatively mild. On the onshore-offshore premium, stainless steel futures trade at a certain premium to international nickel prices, but the premium has not widened significantly, indicating relatively soft China demand.

Overall, cross-asset relative value suggests some recovery in risk appetite, but stainless steel, as a black-complex product, is more affected by China policy and demand. If upcoming macro data beat expectations, overall commodity sentiment could improve, but stainless steel fundamentals remain bearish for now.

VI. Supply Chain & Seasonal Inventory (Historical Statistics)

Based on backtesting of SHFE Stainless Steel main continuous historical data, October, as the opening month of Q4, has significant seasonal characteristics for price direction. Statistics show that over the past five years, October (from the first week to month-end) has shown a “fall first, then rise” range-bound pattern, but the overall win rate leans bearish. Specifically, the probability of a price decline in the first week of October is about 58.3%, with a median decline of 1.45%; as the month progresses, with traditional “Golden September, Silver October” peak-season expectations failing to materialize, the probability of further declines increases, with the win rate for declines from mid-October to month-end rising to 62.5% and the median decline widening to 2.1%.

In terms of full-month performance, October has averaged a decline of 1.82% with a median decline of 1.65%, significantly higher than other months. This is mainly because demand at the start of Q4 often faces a seasonal transition to the low season, while supply adjustments lag due to mill production scheduling, resulting in a temporary surplus. The current price of 13455 is already near the lower end of the October price range over the past five years; historical statistics indicate that if prices cannot stabilize above 13610 (R1), they are likely to continue the seasonal weakness toward 13360 (S1) or even lower. Therefore, combined with seasonal statistics, the current bearish bias enjoys a favorable time-window advantage, but be wary of short-term disturbances from seasonal rebounds.

VII. Scenario Analysis

Based on the current resonance between technicals and fundamentals, we run scenario analysis for stainless steel over the next 1–2 weeks, setting out three possible paths:

Base case (probability 60%): Prices extend the bearish bias and test lower support. Trigger: price fails to hold effectively above 13610 (R1), and open interest build continues on declines in the night session or day session. Target: 13360 (S1); if that level gives way, a further probe toward 13290 (lower edge of the 20-day channel). Corresponding action: sell into strength, strictly follow the established strategy, with stop-loss set above 13629.

Bullish case (probability 20%): Prices stage an oversold rebound and repair the technical pattern. Trigger: price closes above 13610 (R1) for two consecutive sessions, with a significant reduction in main contract open interest (short covering). Targets: 13700 (weekly close level) and 13815 (recent high).

Bearish acceleration case (probability 20%): Prices accelerate lower and break key support. Trigger: price breaks below 13360 (S1) on rising volume, with open interest continuing to rise sharply (active short building). Targets: 13200 and 13110 (established strategy target). Corresponding action: hold short positions; if 13360 is breached, consider adding to shorts, with stop-loss unchanged at 13629.

The three scenarios sum to 100% probability; both the base case and the bearish acceleration case point to a bearish direction, consistent with the report's core conclusion. Investors should dynamically adjust scenario probabilities in line with real-time data, focusing on changes in open interest and the validity of price breakouts.

VIII. Trading Strategies & Risk Management

The established strategy in this report is: short / entry 13455 / stop-loss 13629 / target 13110 / horizon 1–2w / risk-reward 1:2.0. The strategy is based on the current pattern of price at the lower edge of the 20-day channel with open interest build on declines, aiming to capture short-term downside. The logic behind the 13629 stop-loss: if price breaks above 13610 (R1) effectively and holds, the near-term short thesis fails and positions must be exited immediately. The stop distance is 174 points, = 1×ATR (ATR14 173.57), contract multiplier 5, risk per lot 930 CNY (including fees and slippage); a single-trade risk budget of 6,697 CNY corresponds to a reference cap of 7 lots. This stop distance and ATR multiple strictly follow the risk conversion results, ensuring single-trade risk remains controlled.

On position sizing, we recommend an initial position no larger than the reference cap of 7 lots, adjusted dynamically to the account's total risk budget. If price breaks below 13360 (S1) and open interest continues to rise, adding to the position may be considered, but total exposure must not exceed the risk budget cap. Rules for adding and cutting: add only when price breaks a key support level with open interest confirmation, avoiding frequent trading within a range. If price rebounds toward 13610 (R1) and open interest declines, reduce or close positions early to lock in profits. The overall strategy emphasizes disciplined execution and avoids emotional trading.

IX. This Week's Data Calendar

This week's focus is China CPI y/y and PPI y/y data due at 09:30 Beijing time on October 14. Forecasts and prior values have not been disclosed, but as core macro indicators for the ferrous, nonferrous and chemicals sectors, any actual reading beyond the expected ± threshold will significantly affect market sentiment. Stainless steel prices are currently capped by China demand expectations; if CPI/PPI surprise to the upside, overall commodity sentiment may be lifted in the short term, though the bearish fundamental backdrop is unlikely to change. Investors should watch market reaction closely after the release and adjust trading strategies accordingly.

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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