📅 2026-10-08 · SHFE Aluminum · 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 Aluminum Main Continuous (SHFE.AL) In-Depth Analysis Report | Bearish Breakdown, Look Down to 23350 | 2026-10-08

Direction: bearish. Core logic: price effectively broke below the lower edge of the 20-day channel with a large reduction in open interest, indicating active long liquidation and weakening short-term momentum. Technically, the weekly close is suppressed by a bearish candle; fundamentally, inventory destocking is slow, and narrowing premiums in international and Chinese markets reduce import support. Direction invalidation condition: daily close back above 23920, or a volume-backed night-session break above 24000.

I. Bottom Line & Directional Bias

The current strategic direction is clearly bearish. Based on market performance as of the data cutoff on 2026-10-08, SHFE Aluminum main continuous (executed contract AL2611), after a series of pullbacks, confirmed a break below the lower band of the 20-day channel near the 2026-09-30 settlement price of CNY 23,900/t, and closed further lower at CNY 23,385/t on October 8, down 2.15%, confirming a near-term trend reversal to the downside. Three core reasons support this view: First, on the technical pattern, price has retreated from the 24,275 high, breaking below the 20-day moving average support consecutively, and the October 8 close fell below the 20-day low of 23,920, forming an effective breakdown with a downside target pointing directly to the 23,350 low. Second, fund flows show the main contract falling on open interest cuts; on October 8, main contract notional open interest decreased by CNY 857m, and top-20 seat net short positions increased by 6,805 lots, indicating that long capital is exiting proactively while short-covering willingness is insufficient. Third, although fundamentals show a slight inventory drawdown, LME inventories remain elevated at 238,900 tonnes, and the international-vs-China premium has narrowed to -0.81%, with the import window closed, leaving a lack of external support. The invalidation condition is set as follows: if the daily close re-establishes firmly above 23,920, or if the night session breaks above 24,000 on volume, the bearish thesis is falsified and the stance should shift to neutral and on the sidelines.

II. Price Action & Technicals

As of the 2026-10-08 close, SHFE Aluminum main continuous (AL2611) settled at CNY 23,585/t, down 2.15% from the previous day, with an intraday low of CNY 23,350/t and a high of CNY 23,765/t. On the daily series, price has continued to retreat from the 2026-09-23 high of CNY 24,275/t; the October 8 close broke below the 20-day channel lower band of CNY 23,800/t and fell below the 20-day low of CNY 23,920/t, forming an effective breakdown. The 20-day channel range is CNY 23,800–24,675/t, and the current price sits 3.4% below the channel's lower band, indicating strong bearish momentum. ATR14 is CNY 220/t; the current 2.15% decline corresponds to roughly a 0.92% intraday move, approaching the ATR level, suggesting near-term volatility is expanding. The pivot P is CNY 23,868.33/t, R1 is CNY 23,936.67/t, and S1 is CNY 23,761.67/t; the current price has broken below S1, with further downside to the CNY 23,350/t low. On the weekly chart, the last completed weekly candle (2026-09-28 to 2026-09-30) closed at CNY 23,830/t, down 1.53% on the week, forming a weekly bearish candle that caps near-term rebounds. On the night session, October 8's night session extended the decline, with price probing CNY 23,350/t, showing bearish sentiment persisting. The overall technical pattern shows a bearish alignment, with a clear near-term target of CNY 23,350/t; if broken, price may probe further toward CNY 23,200/t.

III. Supply-Demand Balance & Fundamental Drivers

On the fundamentals, inventory data shows structural divergence. LME aluminum inventories stand at 238,875 tonnes (as of 2026-10-07), with a daily change of 0 tonnes and a cumulative drawdown of 5,650 tonnes over the last 20 periods, indicating slow global destocking and lingering supply pressure. SHFE aluminum warrants total 121,863 tonnes (as of 2026-09-30), with a daily change of -6,880 tonnes, a 5.34% decline, showing accelerated warrant drawdown in China, though the absolute level remains historically elevated. On the basis, the October 8 spot basis is -CNY 150/t, with the discount reflecting weak spot demand. On processing margins, electrolytic aluminum processing margins remain low, with some capacity facing losses, but overall operating rates have not declined significantly, keeping supply-side pressure intact. On macro transmission, the US Dollar Index is at 102.14 and US Treasury yields at 5.23%, with the high-rate environment suppressing metal demand expectations. CPI and PPI data will be released on October 14; if inflation comes in above expectations, it may further pressure metal prices. Seasonally, the average decline over the same 20 trading days in the past 15 years is 1.67%, with a median of -0.86%, indicating a historically bearish performance. The current supply-demand pattern shows “weak demand, high inventories,” with the pace of destocking insufficient to support a price rebound, leaving fundamental drivers bearish.

IV. Positioning & Fund Flows

Positioning structure shows fund flows clearly skewed bearish. On October 8, main contract notional open interest was CNY 3.081bn, with a daily change of -CNY 857m, falling on open interest cuts, indicating proactive long liquidation. Top-20 seat holdings total 427,357 lots, up 4,002 lots on the day, of which long positions are 437,703 lots, up 10,807 lots, short positions are 427,357 lots, up 4,002 lots, and net shorts are 10,346 lots, up 6,805 lots. The increase in net shorts indicates strengthening bearish forces, with long liquidation intensifying downside pressure. COT data shows weekly open interest changes diverging from price: price fell while open interest rose, indicating active short building. Comparing implied and realized volatility, ATR14 is CNY 220/t, with current volatility elevated and market risk appetite declining. On fund flows, the main contract fell on open interest cuts with insufficient short-covering willingness, showing bearish market sentiment. The overall positioning structure supports the bearish view; if shorts continue to build, price may probe further lower.

V. Cross-Asset Relative Value & International vs China Markets

Cross-asset relative value shows the metals complex broadly weak. The gold-silver ratio is 69.95, at the 80.16th percentile over 1 year and the 26.72nd percentile over 3 years, indicating gold outperforming silver and rising safe-haven sentiment. The copper-gold ratio is 1.58, at the 96.83rd percentile over 1 year and the 56.61st percentile over 3 years, indicating copper underperforming gold and a weak economic outlook. The oil-gold ratio is 0.022, at the 92.06th percentile over 1 year and the 47.88th percentile over 3 years, indicating crude underperforming gold and soft energy demand expectations. The crack spread is USD 69.72/bbl, reflecting still-adequate refining margins, though overall commodity demand expectations remain weak. On international-vs-China valuation, the SHFE aluminum vs LME aluminum premium is -0.81% (as of 2026-09-30), compared with -1.7% five days earlier, showing Chinese aluminum prices at a discount to international markets, with the import window closed and a lack of external support. The US Dollar Index is 102.14 and US Treasury yields 5.23%, with the high-rate environment pressuring metal prices. Overall, cross-asset relative value shows the metals complex broadly weak, with the international-vs-China premium narrowing and the import window closed, further suppressing Chinese aluminum prices.

VI. Historical Statistics & Seasonality

Based on historical statistics over the same 20 trading days in the past 15 years, SHFE Aluminum main continuous shows a clear seasonal bearish bias around October 8. The sample spans 2012 to 2026; statistics show an average return of -1.67% and a median return of -0.86% over this period, indicating a high probability of price declines in the same season historically. Of the 15-year sample, only 6 years were up and 9 years were down, giving a win rate of just 40%, further confirming the dominance of seasonal headwinds. On extreme moves, the same period in 2016 performed best, rising +6.04%, driven mainly by supply-side reform expectations and a demand recovery; the same period in 2021 performed worst, falling as much as -17.91%, caused by global supply chain disruptions and surging energy costs. As of October 8, 2026, price has broken below the 20-day low of CNY 23,920/t and sits 3.4% below the 20-day channel lower band, highly consistent with the historical average decline of -1.67% and median of -0.86%. Seasonal statistics indicate that, absent major macro tailwinds or sudden supply-side contraction, early to mid-October is often a seasonal correction window for aluminum prices; the current technical breakdown resonates with seasonal headwinds, reinforcing the near-term bearish view. Historical data also show that if price fails to re-establish firmly above 23,920, seasonal downside momentum may extend into mid-October, with the target range shifting lower toward CNY 23,350/t, overlapping with the historical low zone. Seasonal statistics therefore provide historical probability support for the current bearish strategy, and investors should watch the potential impact of seasonal patterns on price behavior.

VII. Scenario Analysis

Based on the current technical breakdown and fund flows, we construct three scenarios—base, bearish, and bullish—with probability weights of 60% base, 25% bearish, and 15% bullish, summing to 100%. Base scenario: prices extend the bearish bias, with the core logic being a daily close below the 20-day low of CNY 23,920/t that is not effectively recovered, allowing short momentum to persist. The trigger is the October 8 close of CNY 23,385/t confirming a break of key support, with the night session failing to break above 24,000 on volume. Target is CNY 23,450/t (implying a 1:1.5 risk-reward), with a further probe to the CNY 23,350/t low if breached. Recommendation: maintain existing short positions, stop-loss at CNY 24,089.7/t (1.1×ATR), target CNY 23,450/t, horizon 1–2 weeks. Bearish scenario: if macro data beats expectations or inventory drawdown disappoints, prices accelerate lower. Trigger is a daily close below CNY 23,350/t with open interest continuing to rise. Target is CNY 23,200/t; operation is to add to shorts, move the stop above CNY 23,830/t, target CNY 23,200/t, horizon 1 week. Bullish scenario: if prices reclaim above 23,920 or the night session breaks above 24,000 on volume, the bearish thesis is invalidated. Trigger is a daily close back above 23,920, or a volume-backed night-session break above 24,000. Target is CNY 24,000/t; operation is to close shorts and stand aside, stop-loss above CNY 24,089.7/t, target CNY 24,000/t, horizon 3–5 days. The probability weights reflect the current degree of technical breakdown and fund flows: the base case carries the highest probability, as price has confirmed a break of key support with shorts adding positions; the bearish case is next, requiring a macro catalyst; the bullish case is lowest, requiring a strong reversal. Investors should watch the 23,920 and 24,000 key levels closely and adjust positioning dynamically.

VIII. Trading Strategies & Risk Management

The established strategy is short, with entry at CNY 23,830/t, stop-loss at CNY 24,089.7/t, and targets of CNY 23,450/t (1–2 week horizon) and CNY 23,440/t (1–5 day horizon), both at a 1:1.5 risk-reward. The stop distance is CNY 259.7, equal to 1.1×ATR (ATR14 236.07), with a contract multiplier of 5 and per-lot risk of CNY 1,359 (including fees and slippage). A single-trade risk budget of CNY 6,693 implies a reference cap of 4 lots. The stop is set at CNY 24,089.7/t because it sits 1.1×ATR above, ensuring it is not triggered within normal volatility while covering potential gap risk. Position sizing is derived from the CNY 6,693 single-trade risk budget and CNY 1,359 per-lot risk, capped at 4 lots, ensuring a single loss does not exceed 1% of total capital. Add/trim rules: if price breaks below CNY 23,450/t with rising open interest, add 1 lot and move the stop to CNY 23,830/t; if price rebounds to CNY 24,000/t without a volume-backed break, cut 50%. Risk conversions strictly cite program outputs—stop distance CNY 259.7, ATR multiple 1.1, per-lot risk CNY 1,359, single-trade risk budget CNY 6,693, reference cap 4 lots—and must not be recalculated. Strategy horizon is 1–2 weeks or 1–5 days, adjusted to market volatility. If entry conditions are not triggered, stand aside and await a daily close back above 23,920 or a volume-backed night-session break above 24,000 before deciding.

IX. This Week's Data Calendar

The data may trigger market volatility; if inflation beats expectations, it could further pressure metals prices. Investors should monitor the market reaction after the release and adjust positioning accordingly. No other events are scheduled for now; watch for directional price changes following the release.

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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