I. Bottom Line & Directional Bias
Directional call: bearish. M2701 settled at 3116 (2026-09-30), down -1.95% over 20 days, sitting at the 25.3% percentile of the 20-day channel of 3088–3183, with price hugging the lower band rather than the upper band; the 5-day change of -0.06% indicates a short-term stall in the decline but no effective rebound. Three core reasons: First, the volume-price structure is weak — main contract open interest at 1,592,266 lots (-18,678), main contract notional open interest at RMB 49.55 billion, down RMB 581 million day-on-day; a price rise on an open interest cut is characterized as short covering, lacking confirmation from proactive long accumulation. Second, the top 20 seats show net long 37,843 lots (+12,783), but longs fell 66,820 lots and shorts fell 79,603 lots; the two-way reduction in positions indicates converging disagreement rather than incremental entry. Third, the last completed weekly candle (09-21 to 09-24) closed at 3118, up 0.71%, with a high of 3131 failing to touch the 20-day channel upper band of 3183, leaving the weekly timeframe still in a rangebound, weak-leaning zone. Conditions that would invalidate the call: M2701 settling above 3183 (the 20-day high), or a single-day open interest build exceeding 50,000 lots with a settlement above 3130, which would void the bearish logic.
II. Price Action & Technicals
M2701 settled at 3116 (2026-09-30), +0.1% versus the prior settlement, -0.06% over 5 days, -1.95% over 20 days, forming a “short-term stable, medium-term weak” structure. The 20-day channel is 3088–3183; the current price sits at the 25.3% percentile, just 28 points from the lower band of 3088 and 67 points from the upper band of 3183, skewing the risk-reward toward a test to the downside. ATR14 is 27.8 (0.89% of the settlement price, intraday full-range basis), RV20 is 9.1%; realized volatility is in a state of convergence, meaning a one-sided breakout requires an external catalyst. Pivot P 3117, R1 3126, S1 3103: the current price of 3116 essentially coincides with P 3117, R1 is 10 points away and S1 is 13 points away, both less than half an ATR (13.9 points), so R1/S1 are not used as trade levels, only as intraday references. On the weekly timeframe, only the last completed weekly candle is cited: 2026-09-21 to 09-24 opened at 3096, high 3131, low 3094, closed at 3118, weekly change +0.71%, a small bullish candle with upper and lower shadows, with a real body of only 22 points, not breaking out of the narrow 3094–3131 range. This week (3 trading days starting 2026-09-28) has not yet closed, currently quoted at 3112 (-0.19%), and does not constitute a weekly conclusion. On the night session, there were no abnormal gap records on the trading day prior to the report date, with price continuing to trade within the settlement range. Overall, 3116 sits in the lower third of the channel; a break below 3088 would open the way toward the 3060 area; to the upside, price must first reclaim 3131 (the high of the last completed weekly candle) before 3183 comes into play.
III. Supply-Demand Balance & Fundamental Drivers
On basis, the data section does not list a rebar basis measure, so no percentage is fabricated, nor is any spot premium/discount structure inferred from it. On processing margins, the rebar paper gross margin (RB−1.6×I−0.5×J) is not given a value in the data section, so its historical percentile cannot be located; therefore no statement is made regarding steel mill profitability.
The available fundamental anchors center on two lines: funding and macro transmission. First, main contract notional open interest of RMB 49.55 billion, down RMB 581 million day-on-day, combined with open interest of -18,678 lots and a settlement of +0.1%, constitutes a classic price-up-on-position-cut combination, indicating this stabilization is driven by short covering rather than downstream demand or restocking expectations; such rebounds typically lack persistence. Second, on the macro side, the dollar index at 101.46 (+0.09%) and the US 10-year Treasury yield at 5.293 (+0.72%); the combination of rising Treasury yields and a firm dollar exerts valuation pressure on USD-denominated ferrous raw materials (iron ore, etc.) and transmits to rebar through the cost side; at the same time, the high-rate environment dampens global manufacturing restocking appetite, creating a marginal drag on indirect export demand for Chinese steel. Third, over the coming week, US nonfarm payrolls (expected 89K, prior 162K), the unemployment rate (expected 4.1%), ISM services PMI (expected 54, prior 55.4) and the FOMC minutes are all scheduled for release; if the data come in stronger than expected, the dollar and Treasury yields would rise further, pressuring rebar through both the cost and sentiment channels; if the data weaken, a temporary rebound window could open, but this would be unlikely to change the medium-term direction dominated by China's supply and demand. Overall, absent support from inventory, basis and margin data, rebar pricing power rests more on funding structure and macro expectations, and both are currently bearish.
IV. Positioning & Fund Flows
Top 20 seats (2026-09-30): long positions 1,483,163 lots (-66,820), short positions 1,445,320 lots (-79,603), net long 37,843 lots (+12,783). A two-way reduction in positions with shorts falling more than longs is the direct reason for the rebound in net long, but this is “short retreat” rather than “long attack” — net long rose 12,783 lots while total open interest declined, indicating incremental capital did not enter. At the main contract level, open interest is 1,592,266 lots (-18,678), notional open interest RMB 49.55 billion, down RMB 581 million day-on-day, combined with a settlement of +0.1%, clearly pointing to short covering (price up on position cut) rather than proactive long accumulation (price up on position build). The key implication of this structure: the fuel for the rebound comes from short liquidation, and once covering momentum is exhausted, price lacks a bid.
On the volatility dimension, ATR14 27.8 (0.89%), RV20 9.1%; realized volatility is at a low level, and implied volatility is not given in the data section, so no direct comparison is possible, but the convergence in realized volatility shows the market's directional disagreement is compressing, typically corresponding to positioning ahead of a breakout. Combined with declining open interest, the buildup is more likely to resolve downward — because longs are not adding at low levels to absorb supply. If open interest subsequently rises with price reclaiming 3131, the nature of the flows would need to be reassessed; until then, the positioning structure supports a bearish call.
V. Cross-Asset & Onshore-Offshore Value
The available cross-asset references are the dollar and rates: dollar index 101.46 (+0.09%), US 10-year Treasury yield 5.293 (+0.72%); the dollar and rates are firm in tandem, pressuring the cost side of ferrous raw materials and affecting Chinese steel valuations through the sentiment channel. The transmission of this combination to rebar is indirect and negative-leaning: raw material pressure → lower cost support → rebar paper center of gravity biased lower rather than higher.
VI. Historical Statistics & Seasonality
Statistics for the 20 trading days starting on the same date over the past 8 years: average -2.84%, median +0.88%, up in 4 of 8 years; best year 2018 at +2.54%, worst year 2021 at -26.14%. This sample exhibits a distribution characterized by “mean dragged down by extreme values, median skewed positive”: the median of +0.88% and a hit rate of 4/8 years (50%) point to seasonality that is neutral with a slight bullish tilt, but the average of -2.84% shows significant tail risk, with the single -26.14% print in 2021 dragging down the overall mean. With only 8 years, the sample has limited statistical power and can only serve as background reference, not as a directional basis. Combined with the current price at the 25.3% low percentile of the 20-day channel and the position-cutting, short-covering structure, the slightly positive seasonal median signal is insufficient to offset the bearish signals from volume-price and funding, and therefore does not change this report's directional conclusion.
VII. Scenario Analysis
Base Case (55% probability): Directional bias is bearish, consistent with Section I. Trigger conditions are continued open interest decline or range-bound positioning at lows, prices failing to reclaim 3131 (the prior closed weekly high), and macro data (10-02 Nonfarm Payrolls, 10-05 ISM Services PMI) not coming in significantly weaker than expected. On the path, M2701 first tests 3088 (lower bound of the 20-day channel), and after a valid breakdown extends toward the 3060 area. Corresponding action: initiate light short positions on rebounds into the 3125–3135 zone, stop-loss above 3150, target 3088, second target 3060.
Bullish Scenario (20% probability): Trigger conditions are US Nonfarm Payrolls significantly below expectations (below 89K by more than 73K, i.e. below 16K) or ISM Services PMI sharply below 54, a pullback in the dollar and US Treasury yields, alongside Rebar rising on an open interest build, with open interest recovering more than 30,000 lots and price reclaiming 3131. Target 3183 (upper bound of the 20-day channel), and above that look for 3210. Corresponding action: participate only on a short-term basis after open interest build is confirmed, stop-loss below 3100, position size no more than half of the base case.
Bearish Scenario (25% probability): Trigger conditions are macro data stronger than expected (Nonfarm Payrolls above 162K or ISM Services PMI above 55.4), further upside in the dollar and US Treasury yields, combined with Rebar losing 3088 while open interest rises in tandem (active short accumulation). Target 3040, secondary level 3010. Corresponding action: add shorts in the direction of the breakdown below 3088, stop-loss above 3120, target 3040. The three scenario probabilities sum to 100%, and the base case direction is consistent with the bearish conclusion in Section I.
VIII. Trading Strategies & Risk Management
Strategy One (primary strategy, bearish): Enter short on M2701 on a rebound into the 3125–3135 zone, stop-loss 3150 (approximately 1 ATR or more from entry, positioned between the prior closed weekly high of 3131 and the upper bound of the 20-day channel), first target 3088 (lower bound of the 20-day channel), second target 3060, horizon 1–5 trading days, recommended position size no more than 15% of total capital, conviction 7. If price breaks below 3088 directly without offering a rebound entry, one may follow with a light short below 3088, with stop-loss raised to 3110.
Strategy Two (alternative, bearish): If price quickly probes 3060 and then stabilizes on an open interest cut (single-day open interest decline exceeding 20,000 lots with settlement above 3070), one may take profit and exit on a short-term basis, without reversing to long—as the medium-term structure remains bearish. Risk management points: keep single-trade loss within 1% of total capital; ATR14 is 27.8, so stop-loss placement must allow sufficient volatility room to avoid being stopped out by intraday noise; refrain from opening new positions within 30 minutes before and after the 10-02 Nonfarm Payrolls and 10-05 ISM data releases to guard against gaps.
IX. This Week's Data Calendar
Beijing time 10-02 20:30: US Average Hourly Earnings MoM (expected 0.3%, prior 0.3%), Nonfarm Payrolls change (expected 89K, prior 162K), Unemployment Rate (expected 4.1%, prior 4.1%); 10-05 22:00: ISM Services PMI (expected 54, prior 55.4); 10-07 04:30: API crude oil inventories, 22:30: EIA crude oil and gasoline inventories; 10-08 02:00: FOMC meeting minutes. The above events affect ferrous valuations via the dollar and interest rate channels, among which Nonfarm Payrolls and ISM Services PMI are high-impact level.
This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.