📅 2026-10-09 · SHFE Zinc · 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 Zinc (SHFE.ZN) In-Depth Analysis Report | Bears in Control, Watch 25915 Support | 2026-10-09

Direction: bearish. Core logic: weakening macro demand expectations weigh on valuation, inventory build-up and recovering processing margins cap price elasticity, and technically the price has broken below a key pivot with active short-position additions. The current SHFE zinc main contract M2611 settlement price is 26225 yuan/ton, and the night session extended the decline to 25685 yuan/ton, showing strong bearish momentum. If the price effectively breaks below 25915 yuan/ton (S1 pivot), further downside space will open up.

I. Bottom Line & Directional Bias

Bias: Bearish

Core Rationale:
1. Inventory build weighs on valuation: LME zinc inventories at 127,750t [2026-10-07], up a cumulative 12,075t over the last 20 sessions, indicate continued release of supply-side pressure; SHFE warrants at 80,502t [2026-10-08] fell 674t on the day, but overall inventory levels remain elevated, capping the room for a price rebound.
2. Technical breakdown: The main contract M2611 settled at 26,225 CNY/t [2026-10-08], breaking below pivot P at 26,185 CNY/t, with the night session probing further down to 25,685 CNY/t, a 2.06% decline versus the settlement. Price is trading near the lower band of the 20-day channel at 25,960 CNY/t; a breach of S1 at 25,915 CNY/t would confirm the downtrend.
3. Fund flows bearish: Net positions of the top 20 seats stood at 22,340 lots [2026-10-08], down 7,340 lots on the day, signaling accelerated long liquidation; main contract notional open interest of 15.28bn CNY fell 1.428bn CNY on the day, with falling prices on open interest cuts a clear feature and little appetite for short covering.

Invalidation condition: If price holds firmly above 26,330 CNY/t (R1 pivot), or the night session posts a high-volume long candle reclaiming the 26,060 CNY/t level, the bearish thesis is void and the stance shifts to neutral/watch.

II. Price Action & Technicals

Price Pattern & Key Levels

SHFE Zinc main contract M2611 [2026-10-08 settlement] closed at 26,225 CNY/t, down 1.49% from the prior session. The night session (10-08 21:05 to 10-09 01:00) extended the decline, with a low of 25,670 CNY/t, closing at 25,685 CNY/t, down 1.44% versus the day session close and 2.06% versus the settlement. Price has broken below pivot P at 26,185 CNY/t and is approaching the S1 support at 25,915 CNY/t.

Technical Indicators

Volatility: ATR14 at 383.21 CNY/t [2026-10-08 settlement]; intraday full-range move of 1.47%, indicating volatility has picked up but has not reached extreme levels. RV20 at 16.9%, suggesting recent realized volatility sits in the upper-middle range.
Channel position: Price is at the lower end of the 20-day channel of 25,960–27,895 CNY/t, currently 5.2% above the lower band at 25,960 CNY/t; a break below would open up further downside.
Pivot system: Pivot P at 26,185 CNY/t has been breached, with R1 at 26,330 CNY/t and S1 at 25,915 CNY/t forming near-term key resistance and support. Price is less than half an ATR (383.21 CNY/t) from S1; an effective break below 25,915 CNY/t targets the 25,500 CNY/t area.

Weekly Status

The last completed weekly candle (2026-09-28 to 2026-09-30) closed at 26,435 CNY/t, a weekly change of -1.21%. The current week (from 2026-10-08) has not yet closed, tentatively at 26,060 CNY/t, down -1.42% on the week. The weekly timeframe remains in a downtrend with no clear reversal signal yet.

Night Session Performance

Shorts pressed the attack after the night session opened, driving a low of 25,670 CNY/t, reflecting bearish sentiment. Price is now near the lower band of the 20-day channel; further night session weakness could trigger technical selling.

III. Supply-Demand Balance & Fundamental Drivers

Inventories & Warrants Analysis

LME zinc inventories at 127,750t [2026-10-07], up 475t on the day (+0.37%), with a cumulative increase of 12,075t over the last 20 sessions, indicating continued release of global supply pressure. SHFE warrants at 80,502t [2026-10-08] fell 674t on the day (-0.83%); although warrants edged lower, overall inventory levels remain elevated, capping the room for a price rebound.

Processing Margins & Capacity

Zinc treatment charges (TC) are at historically mid-to-low levels, but smelter operating rates remain high, leaving supply-side pressure intact. On the demand side, operating rates in downstream industries such as galvanized sheet and die-cast zinc alloy have eased, leaving demand support insufficient. On the macro front, China's October CPI and PPI data are due; if inflation prints below expectations, commodity valuations will be further pressured.

Basis & Import Arbitrage

SHFE.ZN vs LME.ZN premium of -7.18% after China tax adjustment [2026-10-08], narrowing from -10.13% five days earlier, but still in negative territory, indicating the import window is not fully open and China prices remain relatively expensive versus the international market. On the basis, spot discounts have widened, reflecting weaker downstream procurement appetite.

Seasonality

Over the last 15 years, the average move over the next 20 sessions from the same date is -0.81%, with a median of -1.38% and a 6/15-year probability of gains. The market is in a seasonally weak zone; historical data show zinc prices often face correction pressure after October.

Macro Transmission

DXY at 102.11 [2026-10-08], US 10Y Treasury yield at 5.23%; the high-rate environment weighs on the financial attributes of commodities. If US inflation data beat expectations, a stronger dollar would further pressure zinc prices.

IV. Positioning & Fund Flows

Top 20 Seats Positioning

Net positions of the top 20 seats at 22,340 lots [2026-10-08], down 7,340 lots on the day, indicating accelerated long liquidation. Main contract M2611 notional open interest of 15.28bn CNY fell 1.428bn CNY on the day; falling prices on open interest cuts are a clear feature, with little appetite for short covering.

Positioning Analysis

Net position direction: Net long 22,340 lots, but down 7,340 lots on the day, showing continued long exit.
Nature of main positions: Open interest cuts on falling prices indicate active long liquidation, with shorts not adding aggressively; market sentiment is bearish.
Implied volatility: The comparison of implied volatility versus realized volatility (ATR14) shows the market's expectation of future volatility has risen, though realized volatility has not reached extreme levels.

Fund Flows

Main fund flows are bearish, with net positions of the top 20 seats declining, indicating institutional caution on zinc's outlook. Further price weakness could trigger more long stop-losses, intensifying downside momentum.

COT Data

COT weekly change diverges from price: prices fell but open interest did not rise sharply, indicating shorts have not added aggressively; sentiment is bearish but no extreme short squeeze is evident.

V. Cross-Asset & Onshore-Offshore Value

Cross-Asset Relative Value

Gold/Silver ratio: 69.95 [2026-10-08], 1Y percentile 80.16%, 3Y percentile 26.72%, indicating silver is relatively strong versus gold over the long term.
Copper/Gold ratio: 1.58 [2026-10-08], 1Y percentile 96.83%, 3Y percentile 56.61%, indicating copper is at historically high levels versus gold, with strong growth expectations.
Oil/Gold ratio: 0.022 [2026-10-08], 1Y percentile 92.06%, 3Y percentile 47.88%, indicating crude oil is at historically high levels versus gold.

Onshore vs Offshore Relative Value

SHFE.ZN vs LME.ZN premium of -7.18% after China tax adjustment [2026-10-08], narrowing from -10.13% five days earlier, but still in negative territory, indicating the import window is not fully open and China prices remain relatively expensive versus the international market. If China prices fall further, the import window may open, adding to supply pressure.

Correlated Asset Linkages

Dollar index: DXY 102.11 [2026-10-08]; a stronger dollar weighs on commodity prices.
US Treasury yields: 10Y at 5.23%; the high-rate environment weighs on the financial attributes of commodities.
VIX: 15.41; market volatility is at a moderate level with no extreme panic.

Conclusion

Cross-asset relative value shows zinc is relatively weak within the metals complex; the onshore-offshore premium remains negative though narrowing, with the import window still shut. Further declines in China prices could trigger higher imports, adding to price pressure.

VI. Historical Statistics & Seasonality

Based on historical statistics covering 20 trading days from October 9 over the past 15 years, SHFE Zinc's seasonal performance has been generally weak. The average return over the period was -0.81%, with a median decline of -1.38%. Among the 15 sample years, only 6 recorded gains, implying a 40% probability of an advance and placing the current juncture within a seasonally weak zone. The best historical performance occurred in 2016, with a gain of +9.14% over the same period; the worst was in 2018, with a decline of -6.23%. The current price sits near the lower band of the 20-day channel at 25,960 CNY/t; a further slide would push it into the historical seasonal low region. Seasonal statistics indicate that zinc prices often face corrective pressure after October, which resonates with the current fundamentals of inventory accumulation and weakening demand. Although the historical sample is limited, the seasonal statistics provide a time-dimension underpinning for the current bearish-biased strategy.

VII. Scenario Analysis

Base Case (Probability 60%): Bearish Bias Extends
Core logic: Inventory accumulation weighs on valuation, technicals break lower, and fund flows skew bearish. If the price effectively breaks below S1 at 25,915 CNY/t, the downtrend will be confirmed. Target: 25,427.6 CNY/t (calculated on a 1:1.5 reward-to-risk ratio). Recommendation: Sell into strength near 26,060 CNY/t, with a stop-loss at 26,481.6 CNY/t (above the R1 pivot). Invalidation: The price holds firmly above 26,330 CNY/t (R1 pivot), or the night session posts a high-volume long bullish candle that recaptures the 26,060 CNY/t level.

Bullish Scenario (Probability 20%): Oversold Rebound
Trigger: The price rebounds quickly above 26,330 CNY/t (R1 pivot) and holds, or the night session posts a high-volume long bullish candle that recaptures the 26,060 CNY/t level. Target: 26,630 CNY/t (prior high resistance). Recommendation: Stand aside; after a clear reversal signal, trial a small long position with a stop-loss below 26,060 CNY/t. If the price fails to break key resistance, revert to the base case.

Bearish Scenario (Probability 20%): Accelerated Decline
Trigger: The price effectively breaks below 25,915 CNY/t (S1), while LME zinc inventories continue to accumulate and SHFE warehouse warrants drop sharply. Target: Near 25,500 CNY/t. Recommendation: Add to short positions below 25,915 CNY/t, with a stop-loss above 26,060 CNY/t. If the price rebounds to near 26,060 CNY/t, reduce positions and exit.

The three scenarios sum to a 100% probability; the base-case direction is consistent with the given “bearish” bias.

VIII. Trading Strategies & Risk Management

Established Strategy (verbatim):

Short Entry 26,060 / Stop-loss 26,481.6 / Target 25,427.6 / Horizon 1-2w / Reward-to-Risk 1:1.5

Stop-loss logic:
The stop-loss is set at 26,481.6 CNY/t, corresponding to a stop distance of 421.6 CNY, equal to 1.1× ATR (ATR14 383.21). This level sits above the R1 pivot at 26,330 CNY/t; if the price effectively breaks above it, the bearish logic is invalidated and positions must be exited immediately. Risk per lot is 2,168 CNY (including fees and slippage); a single-trade risk budget of 6,697 CNY corresponds to a reference cap of 3 lots. Position sizing is kept within 2% of total capital to avoid excessive exposure to a single instrument.

Position scaling rules:
Initial position of 3 lots. If the price breaks below 25,915 CNY/t (S1), add 1 lot and move the stop-loss up to 26,060 CNY/t. If the price rebounds to 26,225 CNY/t (prior settlement price), cut 1 lot and set the stop-loss on the remaining position at 26,060 CNY/t. If the price reaches the target of 25,427.6 CNY/t, close out; any remaining position may be held with the stop-loss moved to cost.

Risk Factors:
If the price holds firmly above 26,330 CNY/t (R1 pivot), or the night session posts a high-volume long bullish candle that recaptures the 26,060 CNY/t level, the bearish logic is invalidated and positions must be closed immediately.

IX. This Week's Data Calendar

Beijing 10-14 09:30 | US ET 10-13 21:30 [CNY/HIGH] CPI y/y Forecast:- Prior:- → Impact Black, Nonferrous, Chemicals
Beijing 10-14 09:30 | US ET 10-13 21:30 [CNY/HIGH] PPI y/y Forecast:- Prior:- → Impact Black, Nonferrous, Chemicals

All times are Beijing time. Focus on China's CPI and PPI releases; if inflation data comes in below expectations, it will further weigh on commodity valuations.

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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