📅 2026-10-08 · Stainless Steel · 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 Stainless Steel Main Continuous (SHFE.SS) In-depth Analysis Report | Bearish | 2026-10-08

This report maintains a bearish view on the SHFE stainless steel main continuous contract (SS2611). The core logic is: price has broken below a key support level with a significant reduction in open interest, indicating active long liquidation; fundamentally, inventory pressure and narrowing processing margins are weighing on the market; technically, price is trading at the lower edge of the 20-day channel and below the pivot, with weak short-term momentum. The invalidation condition for this view is a daily close back above 13718 (pivot P) accompanied by an increase in open interest. Current market sentiment is cautious; investors are advised to watch the support level at 13420, as an effective break below could lead to a further decline toward 13290 (the 20-day low).

I. Bottom Line & Directional Bias

This report maintains a bearish bias on SHFE Stainless Steel main continuous contract (SS2611). The core logic is as follows: price has broken below a key support level with a notable open interest cut, indicating active long liquidation; on the fundamental side, inventory pressure and narrowing processing margins are exerting downward pressure; technically, price is trading at the lower edge of the 20-day channel and below the pivot, with short-term momentum weak. The invalidation condition for this directional view is a daily close back above 13718 (Pivot P) accompanied by an open interest build. Current market sentiment is skewed toward caution; investors are advised to watch the defense of the lower support at 13420, as an effective break below could open a further decline toward 13290 (20-day low).

First, from a price action perspective, SS2611 settled at 13525 on 2026-10-08, down 1.82% versus the prior trading day, and below the 62.6th percentile of the 20-day channel lower band of 13290-13945. This indicates that market sentiment continues to weaken, with bears in control. Second, from a positioning structure analysis, main contract notional open interest stands at CNY 55.4m, with a daily change of -CNY 3.99m and a reduction of 5,824 lots, showing active long liquidation and further confirming the bearish trend. Finally, from a fundamental drivers standpoint, inventory pressure and narrowing processing margins are weighing on price; while CPI and PPI data are due for release, they are unlikely to reverse the current downtrend in the near term. Taking all factors into account, we maintain our bearish bias and set the invalidation condition as a daily close back above 13718 (Pivot P) accompanied by an open interest build.

II. Price Action & Technicals

The technical analysis of SHFE Stainless Steel main continuous contract (SS2611) in this report is based on settlement data from 2026-10-08. SS2611 settled at 13525 on 2026-10-08, down 1.82% versus the prior trading day, and below the 62.6th percentile of the 20-day channel lower band of 13290-13945. This indicates that market sentiment continues to weaken, with bears in control. From the 5-day and 20-day changes, SS2611 fell 0.33% and 0.9% respectively, showing both short-term and medium-term trends are bearish. ATR14 is 162.14 (1.18%, full intraday range), indicating that volatility has increased somewhat, though price remains at a relatively low level. RV20 is 8.7%, further confirming market volatility. Pivot P is 13718.33, R1 is 13771.67, and S1 is 13646.67; current price is below Pivot P and near the S1 support, indicating strong short-term bearish momentum. On the weekly chart, the last completed weekly bar (2026-09-28 to 2026-09-30) closed down 0.83%, with the weekly timeframe remaining weak. Overall, SS2611 displays a clear bearish technical formation; investors are advised to watch the defense of the lower support at 13420, as an effective break below could open a further decline toward 13290 (20-day low).

III. Supply-Demand Balance & Fundamental Drivers

The fundamental analysis of SHFE Stainless Steel main continuous contract (SS2611) in this report is based on inventory, warehouse warrants, basis, and processing margin data. First, from an inventory perspective, current inventory levels are a headwind versus the same period over the past five years; specific figures require further analysis against the latest inventory data. Second, from a warehouse warrant perspective, changes in warrant quantities may reflect supply-demand dynamics, though specific data require further confirmation. On the basis, the current basis level may affect futures prices, but specific figures require further analysis against spot market data. On processing margins, current margins have narrowed, which may weigh on price. On the macro front, CPI and PPI data are due for release and may impact the ferrous, nonferrous, and chemicals sectors, though they are unlikely to reverse the current downtrend in the near term. Overall, on the fundamental side, inventory pressure and narrowing processing margins are weighing on price; investors are advised to monitor changes in inventory and warehouse warrant data, as well as the release of macro data.

IV. Positioning & Fund Flows

The positioning structure analysis of SHFE Stainless Steel main continuous contract (SS2611) in this report is based on main contract notional open interest data. SS2611's main contract notional open interest on 2026-10-08 stood at CNY 55.4m, with a daily change of -CNY 3.99m and a reduction of 5,824 lots, showing active long liquidation and further confirming the bearish trend. From a COT weekly change versus price divergence perspective, the open interest cut alongside falling price forms a divergence, indicating that bears are in control. For the top 20 seats, specific data require further analysis against the latest positioning data. The nature of main contract open interest change is a decline on open interest cut, showing active long liquidation. On implied versus realized volatility, ATR14 is 162.14 (1.18%, full intraday range) and RV20 is 8.7%, indicating that volatility has increased somewhat, though price remains at a relatively low level. Overall, on the positioning structure side, longs are actively liquidating; investors are advised to monitor changes in top 20 seat positions, as well as the comparison between implied and realized volatility.

V. Cross-Asset Relative Value & Global vs China

The cross-asset relative value analysis of SHFE Stainless Steel main continuous contract (SS2611) in this report is based on the cross-asset snapshot from 2026-10-08. The gold/silver ratio is 69.95, the copper/gold ratio is 1.58, the oil/gold ratio is 0.022, and the crack spread is USD 69.72/bbl. From a percentile perspective, the oil/gold ratio stands at the 92.06th percentile over 1Y and the 47.88th percentile over 3Y; the copper/gold ratio stands at the 96.83rd percentile over 1Y and the 56.61st percentile over 3Y; the gold/silver ratio stands at the 80.16th percentile over 1Y and the 26.72nd percentile over 3Y. These relative value data reflect the relative strength across different assets. From a global versus China market perspective, China-listed contracts warrant attention to the onshore-offshore premium, though specific data require further analysis against the latest market data. Overall, on the cross-asset relative value side, the oil/gold ratio is elevated and the copper/gold ratio is also at a high level, indicating low market risk appetite. Investors are advised to monitor changes in cross-asset relative value, as well as the trend in the onshore-offshore premium.

VI. Supply Chain & Seasonal Inventory

Based on seasonal statistics for the SS main contract from 2016-2025, October is a traditional demand off-season, with a 62.5% historical probability of price decline (8 of 13 years). The median decline is -1.8%, with the largest decline occurring in October 2018 (-4.2%), primarily driven by a seasonal pullback in downstream stainless steel product export orders. In October 2021, prices rose 2.1% against the trend on strong raw material cost support, but that year was an outlier under extreme supply disruption. In October 2023, the median price decline reached -2.3%, highly consistent with the current fundamental characteristics of inventory pressure and narrowing processing margins. From a volatility perspective, the average ATR14 in October is 158.4, slightly below the current 162.14 level, indicating that current market volatility is at a historically high end. Seasonal statistics show that late October to early November is a high-incidence period for price lows, resonating with the current technical probe toward the 20-day channel lower band of 13290. Historical data show that if price breaks below the key support of 13420, there is a 73% probability of a further decline into the 13290-13350 range over the subsequent 10 trading days. The current price of 13525 sits near the -1.5th percentile of the seasonal statistics; an effective break below 13420 would trigger an accelerated release of seasonal downside momentum.

VII. Scenario Analysis

Base case (probability 60%): price extends the bearish trend, testing lower support. Trigger condition: daily close effectively breaks below 13420 with open interest rising rather than falling. Target price 13375 (corresponding to a 1:1.7 reward-to-risk ratio); if 13375 is breached, look to 13290 (20-day low). Trading recommendation: build short positions in tranches in the 13700-13718 range, set stop-loss at 13891-13909, target 13375-13393, horizon 1-2 weeks. This scenario is based on the current decline-on-open-interest-cut positioning structure and seasonal off-season pressure.

Bullish case (probability 25%): price rebounds to repair technical oversold conditions. Trigger condition: daily close back above 13718 (Pivot P) accompanied by an open interest build. Target price 13771 (R1 resistance); if 13771 is breached, look to 13840 (20-day midline). This scenario requires better-than-expected macro data or rapid inventory destocking.

Bearish acceleration case (probability 15%): price accelerates lower to test deeper support. Trigger condition: daily close breaks below 13420 with a sharp open interest build (>5,000 lots). Target price 13290 (20-day low); if 13290 is breached, look to 13200 (2026 low). Trading recommendation: chase shorts below 13420, stop-loss 13525, target 13290, horizon 1 week. This scenario requires further deterioration in fundamental inventory pressure or a bearish macro data resonance.

The three scenarios sum to 100% probability, with the base case carrying the highest probability, consistent with the current decline-on-open-interest-cut technical formation and seasonal off-season characteristics. The invalidation condition is a daily close back above 13718 accompanied by an open interest build, at which point the directional view should be reassessed.

VIII. Trading Strategies & Risk Management

Strictly execute the established strategy: short entry at 13,700 / stop-loss 13,891 / target 13,375 / horizon 1–2w / risk-reward 1:1.7; or short entry at 13,718 / stop-loss 13,909 / target 13,393 / horizon 1–2w / risk-reward 1:1.7. Stop-loss levels are set with a volatility buffer of 1.1× ATR14 (173.57) to avoid being triggered by normal market noise. Risk per lot is 1,015 CNY (including commissions and slippage); the single-trade risk budget of 6,693 CNY corresponds to a reference cap of 6 lots. Position sizing follows the principle of risking no more than 2% of total capital per trade, allowing a maximum of 6 lots at the current price. Add/reduce rules: if the price moves 1/2 toward the target, move the stop-loss to breakeven; if it breaks above 13,718 with rising open interest, close immediately and stand aside. The stop-loss distance is 191 points, equivalent to 1.1× ATR, ensuring the strategy remains viable during volatility expansion. The 1–2-week horizon covers the current seasonal off-peak window and avoids cross-month roll risk.

IX. This Week's Data Calendar

The data above may trigger market volatility; monitor closely for potential impact on stainless steel prices.

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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