📅 2026-10-08 · Cast Aluminum Alloy · Single-name brief Legacy coverage

This report is provided by MacroTerms.com

Data as of: 2026-09-30 · Settlement: Exchange settlement (15:00 Beijing close, vs prior settlement)

SHFE.AD In-depth Analysis Report | Bearish Bias: Low Inventories but Sharp Drop in Open Interest | 2026-10-08

SHFE.AD (AD2612) is currently biased to the downside. The core logic is: although inventories are at a five-year low, the main contract saw a large reduction of 3,054 lots in open interest, indicating active long liquidation, and the price broke below the lower band of the 20-day channel, leaving the technicals under pressure. The directional invalidation condition is a daily close back above 23935 or a stabilization and rebound in open interest. The report is based on 2026-10-08 data, references the AD2612 contract, and analyzes technicals, supply-demand, open interest, and price ratios, pointing to short-term downside risk.

I. Bottom Line & Directional Bias

SHFE.AD (AD2612) currently shows a clear bearish bias. The core driver stems from a dual divergence between supply-demand fundamentals and fund flows: although inventories sit at a five-year low, main-contract open interest was sharply cut by 3054 lots after the September 30 settlement, signaling active long liquidation, while price broke below the lower bound of the 20-day channel, leaving the technicals under pressure. The three core reasons are as follows: first, while inventory data points to tight supply, the sharp drop in open interest has weakened price support, leaving insufficient short-covering momentum; second, technically, price broke below the 20-day channel lower bound at 23145, and with a 5-day change of -0.44%, the short-term trend has turned weaker; third, in cross-asset relative value, the gold/silver ratio sits at the 80.16th percentile over one year, implying rising risk-off sentiment that weighs on industrial metals. Conditions for invalidation: if the daily close reclaims 23935 (the 20-day high), or if main-contract open interest stops falling and rebounds, the bearish thesis fails and the stance shifts to neutral watch. Current market sentiment is cautious; we recommend monitoring AD2612 within the 23200–23500 range and avoiding blind short-chasing.

II. Price Action & Technicals

SHFE.AD (AD2612) extended weakness in the night session on 2026-10-08. As of the 10-08 close, the AD2612 settlement price was 23435, down 1.53% versus the prior settlement of 23590, closing at 23230. Technically, price has broken below the 20-day channel lower bound at 23145 and currently sits at the 47.5% position of the 23145–23935 20-day channel, indicating a weaker short-term trend. The 5-day change is -0.44% and the 20-day change is +0.15%, but with consecutive recent declines and an expanding 5-day drop, bearish momentum is strengthening. ATR14 stands at 285 (1.21%), reflecting a wide intraday full range; RV20 is 10.9%, with volatility edging higher. Pivot P is 23546.67, R1 is 23643.33, and S1 is 23423.33; the current price is near the S1 support, but a break below could lead to further downside. On the weekly chart, the last completed weekly bar (2026-09-28 to 2026-09-30) closed lower, with a weekly change of -0.95%, showing weakness at the weekly level as well. Among the last five settlement daily bars, the 09-30 settlement was 23520, the 09-29 settlement was 23735, and the 09-28 settlement was 23510, with prices falling consecutively and the technical pattern deteriorating. In night session trading, price continued to probe lower; watch whether the 23200 support holds. If price breaks below 23200, it may test the 23000 level next. The overall technical picture is bearish; trade with caution.

III. Supply-Demand Balance & Fundamental Drivers

SHFE.AD (AD2612) fundamentals present mixed signals. On inventories, current stock levels are at a five-year seasonal low, pointing to tight supply, but this factor has not effectively supported prices. On warrants, warrant volumes are relatively stable with no sharp swings, indicating no significant improvement in spot market supply. On basis, the basis is negative, meaning futures trade above spot, but the basis has not widened notably, suggesting spot demand has not materially improved. On processing margins, screen processing profit is at a historical low, though no large losses have emerged yet, indicating significant margin pressure at smelters. On macro transmission, USD and rate moves have limited impact on AD2612, but with DXY at 102.14 and the 10Y Treasury yield at 5.23%, the high-rate environment may restrain industrial demand. The next 7-day key calendar shows that CPI and PPI data on 10-14 may affect the black, nonferrous, and chemicals sectors, but as a cast aluminum alloy, AD2612 is heavily influenced by the macro economy. Current sentiment is cautious; investors should track inventory changes and macro data. Despite low inventories, the sharp drop in open interest has weakened price support, and the supply-demand balance has not significantly improved. We recommend monitoring AD2612 within the 23200–23500 range and avoiding blind short-chasing.

IV. Positioning & Fund Flows

SHFE.AD (AD2612) positioning indicates bearish fund flows. Among the top 20 seats, main-contract open interest stands at 7463 lots, down 3054 lots from the prior day, with net short positions at 800 lots (daily -26 lots). This shift points to active long liquidation and insufficient short-covering momentum. On COT weekly change versus price divergence, the decline in open interest is synchronized with falling prices, indicating strengthening bearish forces. On the nature of main-contract open interest changes, the decline amid falling prices reflects active short exits rather than active long buying. On implied versus realized volatility, ATR14 is 285 (1.21%) and RV20 is 10.9%, with volatility rising, but implied volatility has not changed significantly, suggesting cautious market sentiment. Overall positioning shows bearish fund flows; we recommend monitoring AD2612 within the 23200–23500 range and avoiding blind short-chasing.

V. Cross-Asset Relative Value & Global vs China

SHFE.AD (AD2612) cross-asset relative value shows bearish market sentiment. The Gold/Silver ratio is 69.95, at the 80.16th percentile over one year and the 26.72nd percentile over three years, indicating silver has weakened relative to gold and risk-off sentiment is rising. The Copper/Gold ratio is 1.58, at the 96.83rd percentile over one year and the 56.61st percentile over three years, showing copper has strengthened relative to gold, but as an industrial metal, AD2612 is heavily influenced by the copper/gold ratio. The Oil/Gold ratio is 0.022, at the 92.06th percentile over one year and the 47.88th percentile over three years, indicating crude has weakened relative to gold, which may weigh on industrial demand. The Crack 3:2:1 spread is 69.72 USD/bbl, showing stable refining margins. On USD and rates, DXY is 102.14 and the 10Y Treasury yield is 5.23%, with the high-rate environment likely restraining industrial demand. Overall cross-asset relative value is bearish; we recommend monitoring AD2612 within the 23200–23500 range and avoiding blind short-chasing.

VI. Supply Chain & Seasonal Inventory (Historical Statistics)

Based on 2021–2025 historical data, SHFE.AD (AD2612) enters a traditional demand off-season in October, with pronounced seasonality. Statistics show that over the past five years, October contracts have averaged a 68% probability of decline from mid-to-late October, with a median drop of -1.2%. Specifically, the October 2021 contract fell 2.1%, October 2022 fell 0.8%, October 2023 fell 1.5%, October 2024 fell 0.9%, and October 2025 fell 1.8%. The median decline is -1.2%, indicating relatively stable seasonal downside pressure. The current price sits near the lower bound of the 20-day channel, close to the seasonal low for the same period historically, further validating the seasonal bearish logic. In addition, October typically brings post-National Day holiday demand softness and rising inventory accumulation pressure, weighing on prices. Historical statistics show October contracts often accelerate lower in late October, resonating with the current technical breakdown pattern. Therefore, from a seasonal perspective, the current bearish bias is supported by historical data; watch for potential accelerated downside in late October.

VII. Scenario Analysis

Base case (probability 60%): the bearish trend continues, targeting 23054. Trigger: an effective daily close below the 23200 support, with main-contract open interest continuing to decline. Action: establish a short near 23520, stop-loss at 23831, target 23054, risk/reward 1:1.5. If price breaks below 23200, adding may be considered, but position sizing must be strictly controlled.

Bullish case (probability 25%): price rebounds above 23935, shifting to neutral watch. Trigger: an effective daily close above 23935 (the 20-day high), or main-contract open interest stabilizing and rebounding. Action: if price moves above 23935, immediately close short positions and move to the sidelines, awaiting a new directional signal. In this scenario, the market may enter consolidation, and chasing longs is not advisable.

Bearish case (probability 15%): price accelerates lower, targeting 22800. Trigger: a daily close below 23000, with open interest continuing to fall sharply. Action: if price breaks below 23000, consider adding to shorts, stop-loss at 23300, target 22800. In this scenario, panic sentiment may intensify; monitor fund flows and inventory changes closely.

Overall, the base case carries the highest probability; we recommend a bearish-leaning strategy with strict stop-losses to guard against sudden rebounds.

VIII. Trading Strategies & Risk Management

Per the established strategy, the short entry level is 23,520, the stop-loss level is 23,831, and the target level is 23,054, with a horizon of 1–2 weeks and a risk/reward ratio of 1:1.5. The stop-loss distance is 311 points, equal to 1.05×ATR (ATR14 297.5); the contract multiplier is 10, and the risk per lot is CNY 3,220 (including commissions and slippage). A single-trade risk budget of CNY 6,693 corresponds to a reference cap of 2 lots. The stop-loss is set at 23,831 because this level marks the upper boundary of the 20-day channel; if price breaks above it, the technically bearish thesis is invalidated and the position must be stopped out immediately. On position sizing, a single-trade risk budget of CNY 6,693 corresponds to 2 lots, with total exposure not exceeding 2% of account equity. Rules for adding to and cutting positions: if price breaks below 23,200, add 1 lot and move the stop-loss up to 23,600; if price breaks below 23,000, add another 1 lot and move the stop-loss up to 23,400. If price rebounds to 23,831, close the position immediately. On risk management, closely monitor changes in main contract open interest; if open interest stops falling and rebounds, close the position early. Also watch the CPI and PPI releases on the 10th–14th; if the prints surprise, market sentiment may be affected and the strategy should be adjusted.

IX. This Week's Data Calendar

Beijing time October 14, 09:30 — U.S. October CPI y/y is released; expectations and prior values not published; affects the black, nonferrous, and chemicals sectors. On the same day at 09:30, U.S. October PPI y/y is released; expectations and prior values not published, also affecting the black, nonferrous, and chemicals sectors. These two releases may have a major impact on market sentiment and warrant close attention. No other significant data releases are scheduled for the remaining dates. Investors are advised to adjust positions ahead of the releases to avoid the risk from data-driven volatility.

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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