I. Bottom Line & Directional Bias
Direction: Bullish tilt.
Three core reasons:
1. Basis structure is supportive. The basis of spot 3199 against the main rb2701 settlement of 3105 is +94.0 (2.94%, spot premium), versus the prior reading of +70.5, widening by +23.5 on the day. With futures at a discount to spot, further downside on the board would require spot to weaken in tandem for confirmation, yet the current basis direction is the opposite.
2. Positioning structure has turned long. Notional open interest in the main contract is RMB 50.02bn, a daily change of -RMB 1.21bn (open interest -38,982 lots), while the settlement price rose +0.16% over the same period — a case of open interest cut with price up, i.e. short covering in nature. The top 20 seats show net long 21,401 lots, a daily change of +27,398 lots; both longs and shorts were cut, but the reduction in shorts (-119,178 lots) exceeded that in longs (-91,780 lots), tilting the net position long.
3. Location and volatility are aligned. The settlement of 3109 sits at the 15.2% percentile of the 20-day channel of 3088–3200, close to the pivot P 3107.7; ATR14 is 27.5 (0.89%) while RV20 is only 9.3%. Volatility is at a low level, so a downside break would require an additional catalyst, which is currently absent.
Conditions that would invalidate the direction: A settlement price effectively breaking below 3088 (the 20-day low), or the five-period cumulative warehouse warrant build of +14,236t continuing while the basis premium falls back below +50, would dismantle the above logic and shift the stance to neutral/watch.
II. Price Action & Technicals
On a settlement basis, Rebar main 2026-09-29 settled at 3109, +0.16% versus the prior settlement; the 5-day change is -0.38% and the 20-day change is -2.88%, still consolidating at low levels within a medium-term downtrend. The 20-day channel is 3088–3200, with the current price at the 15.2% percentile, near the lower bound. ATR14 is 27.5, equivalent to a 0.89% full daily range; RV20 is 9.3%, with realized volatility clearly below the intraday range implied by ATR, indicating that recent daily bars have been mostly narrow-range chop rather than trend progression.
Pivot system: P 3107.7, R1 3119.3, S1 3093.3. The settlement of 3109 is slightly above P, but the gap between R1 and the current price is only about 10 points and that between S1 and the current price about 16 points, both less than twice half an ATR (13.75 points); therefore R1/S1 do not constitute valid trade triggers and serve only as range references. The genuinely meaningful boundaries are the 20-day low of 3088 and the 20-day high of 3200.
The last five settlement daily bars: 09-22 closed 3114, 09-23 closed 3113, 09-24 closed 3118, 09-28 closed 3106, 09-29 closed 3105; highs stepped down from 3131 to 3122 and lows from 3107 to 3096, forming a converging, downward-sloping pattern, but daily declines were limited and no high-volume breakdown occurred.
On the night session, from 21:05 to 23:00 on 09-29, Rebar opened at 3113, high 3128, low 3113, closed 3118, +0.42% versus the day session close and +0.29% versus the settlement; the night session recovered part of the day session's decline, with short-term sentiment relatively stable.
On a weekly basis: the last completed weekly bar ran from 2026-09-21 to 09-24, opening 3096, high 3131, low 3094, closing 3118, a weekly change of +0.71%, a modestly positive consolidation week. The current week (two trading days from 09-28) has not yet closed and stands at 3105 (-0.42%), so it does not constitute any weekly-level conclusion.
III. Supply-Demand Balance & Fundamental Drivers
Inventories and warehouse warrants. Exchange-registered Rebar warehouse warrants stand at 87,653t (2026-09-29), a daily change of +2,141t (+2.5%), with a five-period cumulative build of +14,236t. The consecutive accumulation of warrants indicates rising delivery willingness and increased flow of spot into the exchange — the only clearly bearish sub-component in the current fundamentals. Note, however, that the absolute warrant volume of 87,653t remains limited relative to the main contract's open interest of 1,610,944 lots and has not yet reached a scale that would weigh on the board.
Basis and spot. Spot 3199, main rb2701 settlement 3105, basis +94.0 (2.94%), prior +70.5, widening +23.5. A widening basis premium means spot is stronger relative to futures, or futures are oversold relative to spot. With warrants accumulating yet the basis still widening, the actual tightness on the spot side exceeds the looseness reflected in warrant flows; the two offset each other, with a net effect that is neutral-to-slightly-bullish.
*Margins and relative value.
Macro transmission. The dollar index is 101.38 (+0.17%) and the US 10-year Treasury yield is 5.255 (+0.29%); high US Treasury yields weigh on global risk-asset valuations, but Rebar is primarily priced on domestic demand, with the transmission chain running “dollar and US Treasury yields → RMB exchange rate and China's policy space → expectations for property and infrastructure steel demand,” so the short-term impact is relatively indirect. In China, the 09-30 manufacturing PMI is expected at 50.1 (prior 49.8) and the non-manufacturing PMI at 49.2 (prior 49.0); both sit near the boom-bust line with expectations of slight improvement, and if actual readings exceed the thresholds (manufacturing ±0.3, non-manufacturing ±0.2), they will affect ferrous pricing through the demand-expectations channel. This is the most direct macro variable for this instrument over the next 24 hours.
Overall, the fundamentals present a combination of “warrant accumulation bearish, basis premium bullish, macro pending verification,” and the net driver is insufficient to support a one-way decline, consistent with the price stabilizing at the low end of the 20-day channel.
IV. Positioning & Fund Flows
Notional open interest in the main contract is RMB 50.02bn, a daily change of -RMB 1.21bn, corresponding to open interest of -38,982 lots, while the settlement price rose +0.16% over the same period. Price up with open interest down is defined as open interest cut with price up, short covering, rather than being driven by active long accumulation. This nature means the rally is less sustainable than one driven by open interest build, but it also shows that shorts lack the willingness to keep pressing prices at low levels.
Top 20 seats in aggregate: longs 1,560,140 lots (daily change -91,780), shorts 1,538,739 lots (daily change -119,178), net long 21,401 lots (daily change +27,398). Both sides cut positions in tandem, but shorts cut by more, so the net long position expanded. This is direct confirmation of short covering in the seat data, consistent with the direction of the open interest cut in the main contract.
Volatility dimension: ATR14 is 27.5 (0.89%), RV20 is 9.3%. Realized volatility is significantly below the intraday volatility level implied by ATR, indicating that prices over the past 20 trading days have been mostly in narrow-range consolidation without trend-driven volume expansion. In a low realized-volatility environment, once a directional breakout occurs it is often accompanied by volatility expansion, so the breakout direction at the current location is worth tracking, though there is no breakout signal yet.
On fund flows, notional open interest in the main contract shrank by RMB 1.21bn in a single day, a net outflow of funds, but the outflow took the form of two-way position cuts rather than one-sided short addition, so it does not constitute bearish evidence.
V. Cross-Asset Relative Value and Global vs China
The dollar index is 101.38, up 0.17% on the day; the US 10-year Treasury yield is 5.255, up 0.29% on the day. The dollar and US Treasury yields strengthened modestly in tandem, a slight drag on dollar-denominated commodities broadly, but Rebar is a purely domestic-demand-priced instrument, and international transmission operates mainly through sentiment and FX channels, with limited direct elasticity.
From an asset-linkage perspective, US Treasury yields at a high above 5.25% reflect tight US financial conditions, a backdrop that constrains global industrial commodity valuations, but the core pricing power for Chinese ferrous remains with China's demand and inventory cycle. Therefore the cross-asset dimension gives a neutral directional signal for Rebar and does not constitute grounds to change this report's bullish conclusion.
VI. Historical Statistics & Seasonality
The seasonality statistics block shows that over the past 11 years, for the 20 trading days starting from September 30: average change -1.62%, median -2.31%, up years 4/11, down years 7/11. The range extremes are the best year 2016 at +20.55% and the worst year 2021 at -25.94%.
From the statistical distribution, the 20 trading days around National Day have historically been weak, with a win rate of only 36.4% (4/11), and a median of -2.31% implying a modest decline in a typical year. But two points must be emphasized: first, the sample is only 11 years, so statistical power is limited; second, the extreme range is very wide (-25.94% to +20.55%), with standard deviation far exceeding the median, indicating that the seasonal direction in this window is not stable and reflects more the volatility-amplification characteristic of a period dense with macro events around the long holiday rather than a stable directional regularity.
Therefore, seasonality serves only as background reference in this report and is not used as a basis for directional judgment. The current bullish conclusion rests on three current-period data points — basis, positioning structure and technical location — rather than seasonality.
VII. Scenario Analysis
Base Case (55% probability): Range-bound with an upward bias; center of gravity drifts modestly higher.
Trigger conditions: China's 09-30 manufacturing PMI prints near the expected 50.1 (not materially below the lower threshold), night session and day session remain low-volatility, and warrant accumulation does not accelerate.
Path: Settlement price trades within the 3088–3131 range, with the center of gravity drifting modestly higher from 3105 to the 3118–3125 area, corresponding to the prior closed weekly close near 3118.
Target prices: First target 3119.3 (R1), second target 3131 (5-day high).
Corresponding action: Scale into light longs on dips into the 3090–3100 zone, stop-loss below 3088, targets 3119–3131. This scenario's direction is consistent with the bullish conclusion in Section I.
Bull Case (25% probability): Breakout above the 20-day channel midline.
Trigger conditions: The 09-30 manufacturing PMI actual reading exceeds the upper bound of expectations (>50.4), or the non-manufacturing PMI comes in materially better than 49.2, combined with a high-volume night session rally and open interest shifting from cuts to builds.
Path: After settling firmly above 3131, the settlement price advances toward the 20-day channel midline (approximately 3144), with volatility expanding from RV20 of 9.3%.
Target prices: 3144, with a further look toward 3200 (20-day high).
Corresponding action: Add on a breakout above 3131 accompanied by rising open interest, with stop-loss trailed up to 3105.
Bear Case (20% probability): Breakdown below the 20-day low.
Trigger conditions: PMI actual reading falls below the lower bound of expectations (manufacturing <49.8), or single-day warrant increases expand significantly, with the basis premium retreating below +50.
Path: After the settlement price breaks below 3088 (20-day low), there is no clear technical support below, and ATR14 of 27.5 implies a single-day move down to around 3060.
Target prices: 3060, with a further look toward the 3050 round-number level.
Corresponding action: If price breaks below 3088 with the basis weakening in tandem, exit longs via stop-loss and do not reverse into shorts (as the directional conclusion is bullish, contrarian strategies fall outside the scope of this report).
VIII. Trading Strategies & Risk Management
Strategy 1: Light long probe at the lower end of the range (primary strategy).
Entry: 3090–3100 (close to S1 at 3093.3 and above the 20-day low of 3088).
Stop-loss: 3075 (approximately 13 points below the 20-day low of 3088, roughly 20 points from the entry midpoint of 3095, close to the magnitude of 1 ATR14 at 27.5 points).
Targets: First target 3119.3 (R1), second target 3131 (5-day high).
Horizon: 1–5 trading days.
Position sizing: No more than 10% of total capital, as the current rally is driven by short covering and open interest cuts, which is less sustainable than a rally driven by open interest builds; position sizing should be correspondingly conservative.
Strategy 2: Add on breakout confirmation (alternative).
Entry: On a pullback that holds after the settlement price settles firmly above 3131.
Stop-loss: 3105 (below the prior settlement level).
Targets: 3144 (20-day channel midline), with a further look toward 3200.
Horizon: 3–10 trading days.
Position sizing: Add no more than 5% on top of Strategy 1, for a combined total of no more than 15%.
Risk Factors: First, if China's 09-30 PMI comes in significantly below expectations, it would directly hit demand expectations and trigger the bear case; second, if the cumulative 5-session warrant build of +14,236 tonnes accelerates, it would pressure the basis premium and weaken the bullish thesis; third, with the long holiday approaching, attention is needed on exchange margin and price-limit adjustments, the absence of a night session during the holiday, and post-holiday gap risk from international market moves (gold, crude oil, copper, US soybeans) during the extended break.
IX. This Week's Data Calendar
Beijing time 09-30 09:30: China manufacturing PMI (expected 50.1, prior 49.8, threshold ±0.3) and non-manufacturing PMI (expected 49.2, prior 49.0, threshold ±0.2); 09:45: RatingDog manufacturing PMI (expected 51.7, prior 51.5, threshold ±0.2) and services PMI (expected 51.3, prior 51.4, threshold ±0.1).
Beijing time 09-30 20:30: US personal income MoM (expected 0.4%), personal spending MoM (expected 0.8%), final GDP QoQ (expected 1.5%), and core PCE MoM (expected 0.3%, prior 0.2%, threshold ±0.1%).
Beijing time 10-02 20:30: US nonfarm payrolls (expected 90K, prior 162K, threshold ±72K), unemployment rate (expected 4.1%), and average hourly earnings MoM (expected 0.3%).
This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.