I. Price Action & Technical Analysis
SHFE Copper main continuous contract closed at CNY 109,620/t on September 18, 2026, up 1.4% on the day, marking the largest single-day gain of the week; it closed at CNY 108,500/t on September 17 (+1%) and CNY 107,740/t on September 16 (+0.76%), forming a three-day rising structure. Previously, it closed at CNY 107,030/t on September 15 (-1.07%) and CNY 107,840/t on September 14 (-0.75%), having come under pressure earlier in the week. The weekly low was CNY 106,650/t (L20 basis), the 20-day high CNY 112,330/t (H20 basis); the current price sits in the upper-middle of the 20-day range, with about 2.47% of room to the 20-day high and roughly 2.79% of buffer above the 20-day low.
The moving average system is turning bullish after entanglement: on September 18, MA5 stood at CNY 108,146/t and MA20 at CNY 108,921/t, with the close of CNY 109,620/t above both MA5 and MA20 — the first dual crossover since September 14; however, on September 15 MA5 (109,428) was still above MA20 (108,706.5), and on September 16 MA5 (108,760) and MA20 (108,751) were nearly glued together, indicating that the short MA has re-turned up after a rapid pullback, with trend confirmation still insufficient. On the pivot system, the September 18 pivot P was CNY 109,540/t, with the close of CNY 109,620/t slightly above P; R1 was CNY 109,930/t and S1 CNY 109,230/t, placing price in the moderately strong zone between P and R1; on September 17, P was 108,163.3, R1 108,916.7 and S1 107,746.7, with the two-day pivot center shifting up by about CNY 1,377/t, consistent with the upward price direction.
For the international benchmark HG=F, ATR was USD 0.1344/lb (September 18 basis), down slightly from 0.1408 on September 17, showing marginal convergence in intraday range. On risk metrics: 20-day volatility Vol20 at 26.21%, 30-day Sharpe Sharpe30 at -0.2841, 52-week max drawdown DD52w at 13.49%, 20-day drawdown DD20d at 6.96%, VaR95 at -2.97% — overall a medium-to-high volatility regime with weak risk-adjusted returns. Key levels: resistance 109,930 (R1) → 112,330 (H20); support 109,230 (S1) → 108,921 (MA20) → 106,650 (L20).
II. Fundamental Drivers
Macro rates & USD: the US 10-year Treasury yield ^TNX was quoted at 4.998, up 1.03% on the day, approaching the 5% round level; the dollar index DX-Y.NYB stood at 100.22, flat on the day. If the 10-year yield effectively breaks above 5%, the probability of pressure on copper's financial attribute rises; if the yield falls back below 4.8%, a repair in risk appetite could support copper prices.
Inventories & spot: LME warehouse stocks were reported at 255,100 tonnes on September 18, versus 255,900 tonnes on September 17, a modest drawdown of 800 tonnes over two days; SHFE warrants stood at 26,655 tonnes on September 18, with a weekly change of -4,745 tonnes, a notable drawdown; COMEX registered stocks were reported at 432,092.2 tonnes on September 17. The China headline showed “LME copper posts its 11th gain in 12 weeks as China demand rises; Yangshan copper premium hits a near four-year high” (SMM_CN, 2026-09-19); the rise in the Yangshan premium is directionally consistent with the SHFE warrant weekly drop of 4,745 tonnes, pointing to a marginal improvement in China's import demand. However, note that absolute LME stocks remain above 250,000 tonnes, and the elasticity constraint of global visible inventories on price has not yet been lifted.
Term structure & spreads: the international benchmark term structure is in CONTANGO, with the M1-M2 spread at -0.0345 (-0.52%), far-month annualized RY at -6.22% and slope at 0.0327, a mild near-end discount structure reflecting relatively tight spot but moderate magnitude. The copper-gold ratio HG_GC_RATIO stands at 0.0015, at the 72.62nd percentile over one year and the 34.52nd percentile over three years, indicating copper is relatively strong versus gold on a one-year horizon but still low on a three-year horizon.
Geopolitics & policy: international headlines over the past 48 hours have been dominated by SMM price assessment launches and industry-chain analysis, including “SMM to Launch Africa Copper Logistics Freight Assessments on September 25, 2026” and “SMM to Launch Copper Cathodes A Grade CIF Nhava Sheva Price on September 23, 2026”, with no geopolitical events directly hitting copper mine supply; among China headlines, electrolytic aluminum profit broke through CNY 8,000/t while coking coal/coke and Rebar weakened, showing a clear divergence between ferrous and non-ferrous, raising the weight of copper's independent fundamentals.
III. Positioning & Fund Flows
China positioning: SHFE Copper main continuous open interest fell for four consecutive sessions from 187,828 lots on September 14 to 151,880 lots on September 18, a cumulative decline of 35,948 lots, or about 19.14%; over the same period, volume fell from 114,364 lots to 81,021 lots. The three-day price rise accompanied by persistent open interest outflow is a typical short-covering signature rather than incremental long building, weakening the funding confirmation of the rally. If open interest subsequently recovers above 160,000 lots while price holds 109,540 (P), the bullish structure becomes more credible; if open interest keeps sliding while price stalls, the durability of the rebound is in doubt.
International COT: as of 2026-09-15, total non-commercial OI was 289,463 contracts, with longs at 83,704 contracts, shorts at 18,598 contracts and net longs at 65,106 contracts, down 17,048 contracts week-on-week; previously, net longs were 82,154 contracts on September 8 (Δ+9,272), 72,882 contracts on September 1 (Δ-3,389) and 76,271 contracts on August 25 (Δ-2,377). Net longs have fallen for two consecutive weeks, with the September 15 weekly drop the largest in four weeks.
Crowding & options: on September 15, net long share netPct was 22.49%, crowding at 63.36, CTA reading at 98, and hedge ratio at 58.27%; versus September 8's netPct of 27.62%, crowding of 69.39 and hedge of 56.46%, crowding has retreated about 6 points from its peak — long trades are no longer extremely crowded, but the full-scale CTA reading of 98 means trend-following funds remain elevated, and procyclical pressure from programmatic de-risking cannot be ignored once price breaks key support. The volatility proxy ^VIX was quoted at 14.81 (-4.08%), with a mild option implied-volatility environment, consistent with the decline in HG=F's ATR.
IV. Cross-Asset Relative Value
Copper-gold ratio: HG_GC_RATIO stands at 0.0015, at the 72.62nd percentile over one year and the 34.52nd percentile over three years. This combination implies copper has outperformed gold within the one-year window, yet remains in the mid-low percentile over three years; if the global manufacturing cycle continues to repair, there is room for the copper-gold ratio to revert toward its three-year median; conversely, if safe-haven demand dominates, gold's relative outperformance will cap the ratio.
A reference anchor is the dollar index at 100.22 and the 10-year UST at 4.998, which together form the discounting constraint on USD-denominated commodities.
Copper vs ferrous divergence: China headlines showed “Coking coal & coke collapse! Rebar breaks 3100! Steel mills all cutting!” (Sina_Futures, 2026-09-18) and “Metals mostly red; SHFE lead, platinum, palladium up over 2%; SHFE silver up nearly 4%; coking coal & coke down over 5%” (SMM_CN, 2026-09-18), with ferrous and non-ferrous diverging and copper holding relative strength within the sector. If this divergence persists, copper's cross-asset allocation appeal rises; if further ferrous weakness triggers a broad contraction in industrial-commodity risk appetite, copper cannot be fully immune.
V. Sentiment
Sentiment score: weighing bullish signals — China's three-day rise, the Yangshan premium hitting a near four-year high, and the SHFE warrant weekly drop of 4,745 tonnes — against bearish signals — open interest falling for four straight sessions and COT net longs down 17,048 contracts on the week — the current sentiment assessment is neutral-to-bullish, with moderate intensity.
Headline bias over the past 48 hours: of seven China-related headlines, the one directly bullish for copper was “LME copper posts its 11th gain in 12 weeks as China demand rises; Yangshan copper premium hits a near four-year high” (SMM_CN, 2026-09-19 17:55); bearish or diverting items were the coking coal/coke collapse, Rebar breaking 3100 and steel mills all cutting (Sina_Futures, 2026-09-18 19:27), plus the Lithium Carbonate contract rule adjustment (GFEX_Notice, 2026-09-18 16:40). The eight international headlines were mainly SMM price assessment launches and industry-chain analysis, directionally neutral. Overall, no negative shock event targeting copper has emerged in sentiment.
VI. Historical Statistical Patterns
Observable statistical characteristics: First, the current 52-week maximum drawdown (DD52w) stands at 13.49% and the 20-day drawdown (DD20d) at 6.96%; the drawdown structure shows a larger medium-term correction than short-term, indicating the price is in a repair phase rather than a trend-acceleration phase. Second, the 30-day Sharpe (Sharpe30) is -0.2841, a negative reading, indicating poor risk-adjusted returns over the past 30 trading days; historically, a return to positive territory has often required the price to hold consecutively above the 20-day moving average. Third, the 20-day volatility (Vol20) is 26.21%, in a medium-to-high range; if volatility retreats from elevated levels while the price rises, it typically corresponds to a healthier trend structure. The above are descriptions of indicator statistical characteristics, not historical backtest conclusions.
VII. Long-Short Game Scenario Analysis
Bullish logic (no fewer than 4 points): 1) Three consecutive up days; the September 18 close of CNY 109,620/t is above both MA20 (108,921) and the pivot P (109,540), signaling a stronger technical structure; 2) SHFE warehouse warrants at 26,655 tonnes, down 4,745 tonnes week-on-week, and the Yangshan copper premium at a four-year high, providing spot evidence of marginal improvement in Chinese demand; 3) COT crowding has eased from 69.39 to 63.36, releasing long-crowding risk and leaving room for subsequent open interest build; 4) The copper-gold ratio sits at the 72.62nd percentile over one year, with relative strength advantage, and copper's sector allocation value rises against a backdrop of weakness in the black complex; 5) ^VIX has fallen to 14.81 (-4.08%), with macro risk appetite not deteriorating.
Bearish logic (no fewer than 4 points): 1) SHFE Copper open interest has fallen a cumulative 35,948 lots over four days to 151,880 lots; rising price with falling open interest means the rally lacks confirmation from incremental capital; 2) COT net longs fell 17,048 contracts in a single week to 65,106 contracts, the largest decline in four weeks, indicating marginal retreat by trend funds; 3) LME inventories at 255,100 tonnes remain high in absolute terms, so the global visible inventory constraint has not been lifted; 4) The US 10-year Treasury yield at 5% is approaching 5%, with the rates side exerting sustained pressure on commodity valuations; 5) The term structure is in CONTANGO, with the far-month annualized RY at -6.22%, and no extreme squeeze signal at the front end; 6) Sharpe30 is -0.2841, with risk-adjusted returns still negative.
Short- vs medium-term balance of forces: Short term (1-5 days) favors the bulls, based on three consecutive up days, holding above MA20 and P, and a stronger spot premium; medium term (2-4 weeks) is roughly balanced with a slight bearish tilt, based on the dual decline in open interest and COT net longs, the high absolute inventory level, and unresolved rate pressure. If the price holds above 109,930 (R1) and open interest recovers, the medium-term balance tilts bullish; if it breaks below 109,230 (S1) and loses 108,921 (MA20), the risk of a retracement to 106,650 (L20) rises.
VIII. Trading Strategies & Risk Management
Strategy 1 (trend-following long on pullback): Entry reference the 109,230-109,540 zone (S1 to P), stop-loss at 108,900 (below MA20), targets 109,930 (R1) as the first target and 112,330 (H20) as the second, horizon 1-5 trading days, position size recommended at no more than 15% of total capital, conviction 6. Trigger condition: price pulls back without breaking S1 and intraday open interest stops falling and recovers.
Strategy 2 (range fade at the top): If the price rises to around 112,330 (H20) while COT net longs do not recover in tandem and open interest remains below 160k lots, consider a light short trial; entry reference 112,000-112,330, stop-loss above 113,000, target 109,540 (P), horizon 3-10 trading days, position size no more than 10% of total capital, conviction 5.
Risk management: single-trade risk exposure capped at 1.5% of account equity; with Vol20 at 26.21% and VaR95 at -2.97%, overnight positions must reserve a margin buffer accordingly; if the 10-year Treasury yield breaks above 5.1% or the dollar index breaks above 101.5, halve the long strategy; if SHFE warehouse warrants turn from falling to rising and LME inventories recover above 260k tonnes, the short strategy may be raised to conviction 6. All strategies are scenario assumptions and do not constitute definitive judgments.
IX. This Week's Data Calendar
China financial calendar for the next 7 days (data segment basis): 2026-09-23 03:15 France Flash Manufacturing PMI (EUR/MEDIUM), 03:15 France Flash Services PMI (EUR/MEDIUM), 03:30 Germany Flash Manufacturing PMI (EUR/MEDIUM), 03:30 Germany Flash Services PMI (EUR/MEDIUM), 04:30 UK Flash Manufacturing PMI (GBP/MEDIUM), 04:30 UK Flash Services PMI (GBP/MEDIUM).
This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.