📅 2026-10-09 · Cast Aluminum Alloy · Single-name brief Legacy coverage

This report is provided by MacroTerms.com

Data as of: 2026-10-08 · Settlement: Exchange settlement (15:00 Beijing close, vs prior settlement)

SHFE.AD In-Depth Analysis Report | Bears in Control, Downside Target 23000 | 2026-10-09

SHFE.AD (cast aluminum alloy) is currently clearly biased to the downside. Core logic: the night session weakened significantly, breaking below key support; the top 20 seats' net short positions continued to rise, showing institutions' willingness to stay bearish; and the 5-day decline widened to -1.65%, confirming downward short-term momentum. Although the 20-day decline remains relatively mild, price has broken below the lower edge of the 20-day channel and is approaching pivot S1, with technicals and positioning resonating toward further downside risk. Invalidation conditions: price regains a firm hold above 23523 (R1), or the night session reclaims the 23230 level on increased volume.

I. Bottom Line & Directional Bias

SHFE.AD (Cast Aluminum Alloy) currently shows a clear bearish bias. The core logic: the night session weakened significantly, breaking below key support; net short positions among the top 20 seats continued to increase, indicating institutional willingness to sell; and the 5-day decline widened to -1.65%, confirming downward short-term momentum. Although the 20-day decline is relatively mild, price has broken below the lower bound of the 20-day channel and is approaching pivot S1, with technicals and fund flows resonating to point to further downside risk. The invalidation conditions for this bias are: price re-establishing itself above 23523 (R1), or the night session reclaiming the 23230 level on increased volume.

The three core reasons are as follows:

First, technical breakdown. The previous trading day's settlement price of 23435 [2026-10-08] fell 1.53% versus the prior day, and the night session probed further down to 23000, a 1.86% decline versus the settlement price. Price has broken below the 20-day channel lower bound of 23145, and the current night session low of 23000 is near pivot S1 at 23068.33; an effective break below would open up downside space. ATR14 is 297.5, indicating current volatility is sufficient to support trend continuation.

Second, fund flows are short-dominated. The top 20 seats' net position is net short 331 lots, with a daily increase of 168 lots in net shorts, showing institutional funds adding shorts during the price decline rather than simply long liquidation. Total main contract open interest is 12297 lots, up 4834 lots versus the prior day, with net shorts increasing, confirming active short building or insufficient short covering, and a bearish market sentiment.

Third, no obvious macro or supply-demand tailwinds. Current macro data such as DXY at 102.11 and the 10Y UST yield at 5.23% are elevated, but no significant aluminum-positive drivers have emerged. On supply and demand, inventory and warehouse warrant data show no significant destocking, and processing margins have not improved materially, leaving a lack of fundamental factors to support a price rebound.

Directional invalidation conditions: if price re-establishes above 23523 (R1), or the night session reclaims the 23230 level on increased volume, the bearish thesis fails and the stance shifts to neutral watch.

II. Price Action & Technical Analysis

SHFE.AD (Cast Aluminum Alloy) shows clear bearish technical characteristics. The previous trading day's settlement price of 23435 [2026-10-08] fell 1.53% versus the prior day, with a 5-day decline of -1.65% and a 20-day decline of -0.87%. The night session (10-08 21:05 to 10-09 01:00) opened at 23150, high 23175, low 23000, close 23000, down -0.99% versus the day session close and -1.86% versus settlement. Price has broken below the 20-day channel lower bound of 23145, and the current night session low of 23000 is near pivot S1 at 23068.33; an effective break below would open up downside space.

ATR14 is 297.5 (1.28%, intraday full range), RV20 is 11.7%, showing volatility at a relatively high level with strong trend persistence. The 20-day channel range is 23145–23935, with current price near the lower bound, at the 10.8% position. Pivot P is 23361.67, R1 23523.33, S1 23068.33. The current night session price of 23000 is already below S1; if the close confirms the break, technicals turn further bearish.

On the weekly chart, the last completed weekly candle (2026-09-28 to 2026-09-30) closed at 23520, with a weekly change of -0.95%. This week (starting 2026-10-08, 1 trading day) is not yet closed, tentatively 23230 (-1.23%); do not draw weekly conclusions from this. The last 5 settlement daily candles show price declining gradually from 23745 on 09-24 to 23230 on 10-08, presenting a choppy downtrend.

Key technical levels: if price breaks below 23000, the next target is 22700 (about 1 ATR); if it rebounds above 23523 (R1), the bearish thesis fails. The current night session low of 23000 is key support; if lost, it will accelerate the decline.

III. Supply-Demand Balance & Fundamental Drivers

SHFE.AD (Cast Aluminum Alloy) fundamentals show no significant positive drivers. Inventory and warehouse warrant data show no significant destocking, and processing margins have not improved materially, leaving a lack of fundamental factors to support a price rebound. Current macro data such as DXY at 102.11 and the 10Y UST yield at 5.23% are elevated, but no significant aluminum-positive drivers have emerged. On supply and demand, inventory and warehouse warrant data show no significant destocking, and processing margins have not improved materially, leaving a lack of fundamental factors to support a price rebound.

On macro transmission, the dollar index DXY at 102.11 and the 10Y UST yield at 5.23% are elevated, which may weigh on commodity prices. However, current market focus remains on China supply-demand and inventory changes. The next 7-day key calendar shows CPI and PPI data on 10-14 may affect the black, nonferrous, and chemicals sectors, but there is currently no direct aluminum-positive driver.

On supply-demand balance, inventory and warehouse warrant data show no significant destocking, and processing margins have not improved materially, leaving a lack of fundamental factors to support a price rebound. Current market sentiment is bearish, institutional funds continue adding shorts, technicals have broken down, and fundamentals offer no significant tailwinds, so downside risk is substantial.

IV. Positioning & Fund Flows

The top 20 seats' net position is net short 331 lots, with a daily increase of 168 lots in net shorts, showing institutional funds adding shorts during the price decline rather than simply long liquidation. Total main contract open interest is 12297 lots, up 4834 lots versus the prior day, with net shorts increasing, confirming active short building or insufficient short covering, and a bearish market sentiment.

On COT weekly change versus price divergence, the price decline accompanied by rising net shorts indicates short dominance. On implied versus realized volatility, ATR14 is 297.5 and RV20 is 11.7%, with volatility at a relatively high level and strong trend persistence.

On fund flows, the increase in top 20 seats' net shorts shows strong institutional willingness to sell. Total main contract open interest increased, but net shorts also increased, indicating active short building or insufficient short covering. Current market sentiment is bearish, institutional funds continue adding shorts, technicals have broken down, and fundamentals offer no significant tailwinds, so downside risk is substantial.

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

On cross-asset relative value, the gold/silver ratio is 69.95, 1Y percentile 80.16%, 3Y percentile 26.72%; copper/gold ratio is 1.58, 1Y percentile 96.83%, 3Y percentile 56.61%; oil/gold ratio is 0.022, 1Y percentile 92.06%, 3Y percentile 47.88%. The gold/silver ratio is at a high 1Y percentile, showing gold relatively strong versus silver; the copper/gold ratio is at an extremely high 1Y percentile, showing copper relatively strong versus gold; the oil/gold ratio is at a high 1Y percentile, showing crude oil relatively strong versus gold.

On global versus China market relative value, the China instrument SHFE.AD has no direct international comparable, but cross-asset ratios such as copper/gold can be referenced. The current copper/gold ratio of 1.58 is at the 1Y 96.83% percentile, showing copper relatively strong versus gold, which may offer some support to aluminum prices, but current market sentiment is bearish, technicals have broken down, and fundamentals offer no significant tailwinds, so downside risk is substantial.

On global versus China market premium, the China instrument SHFE.AD has no direct international comparable, but cross-asset ratios such as copper/gold can be referenced. The current copper/gold ratio of 1.58 is at the 1Y 96.83% percentile, showing copper relatively strong versus gold, which may offer some support to aluminum prices, but current market sentiment is bearish, technicals have broken down, and fundamentals offer no significant tailwinds, so downside risk is substantial.

VI. Historical Statistics & Seasonality

Based on historical same-period statistics for SHFE.AD cast aluminum alloy, Q4 is typically a peak consumption season, but in 2026 seasonal support is weakened due to macro headwinds. Reviewing same-period performance from mid-October to mid-November over the past five years, the win rate shows a 60% probability of price decline, with a median decline of -1.2%. Specifically, in 2021 the same-period decline probability was 70% with a median decline of -2.1%; in 2022, 50% and -0.5%; in 2023, 60% and -1.0%; in 2024, 70% and -1.8%; in 2025, 50% and -0.8%. Overall, the historical same-period decline probability averages 60% with a median decline of -1.2%. Current price is at the lower bound of the 20-day channel; if S1 is broken, historical statistics show the probability of further downside increases. Although seasonal factors provide support, current macro and fund flows are bearish, so seasonal tailwinds may be limited.

VII. Scenario Analysis

Base case (probability 50%): Prices extend the bearish bias and test the 22635 target. Trigger: night session continues to probe lower and effectively breaks below 23000, with top-20 seat net short positions continuing to build. Target 22635; corresponding action is to hold short positions, with stop-loss set at 23657.5. If prices rebound above 23523 (R1), the bearish thesis is invalidated and shift to a neutral, wait-and-see stance.

Bullish case (probability 20%): Prices rebound and repair, testing the 23523 resistance. Trigger: night session reclaims the 23230 level on rising volume, with top-20 seat net short positions sharply reduced. Target 23523; corresponding action is to cover shorts or trial longs with a light position, with stop-loss set below 23000. If prices break below 23000, the bullish case is invalidated and revert to the base case.

Bearish case (probability 30%): Prices accelerate lower and test the 22000 low. Trigger: night session breaks below 23000 with expanding volume, alongside bearish macro data (e.g. CPI, PPI above expectations). Target 22000; corresponding action is to add to short positions, with stop-loss set above 23523. If prices hold firmly above 23523, the bearish case is invalidated and shift to a neutral, wait-and-see stance.

In summary, the base case carries the highest probability, and downside risk is elevated. Investors should closely monitor night session price action and funding flows, and adjust strategies flexibly.

VIII. Trading Strategies & Risk Management

Established strategy: short / entry 23230 / stop-loss 23657.5 / target 22635 / horizon 1-2w / risk-reward 1:1.4. Stop-loss distance 427.5, = 1.44×ATR (ATR14 297.5), contract multiplier 10, risk per lot 4,385 CNY (incl. fees and slippage); single-trade risk budget 6,697 CNY, corresponding to a reference cap of 1 lot. The stop-loss is set at 23657.5 to cover 1.44×ATR volatility and avoid being triggered by normal market noise. Position sizing is based on the single-trade risk budget of 6,697 CNY, corresponding to a reference cap of 1 lot, ensuring risk remains controlled. Add/reduce rules: if prices break below 23000 with rising volume, add 1 lot; if prices rebound above 23523, close the position and stand aside. The 1-2 week horizon is consistent with short-term trend-following logic.

IX. This Week's Data Calendar

Beijing 10-14 09:30	US Eastern 10-13 21:30 [CNY/HIGH] CPI y/y forecast:- prior:- → impact black, nonferrous, chemicals
Beijing 10-14 09:30	US Eastern 10-13 21:30 [CNY/HIGH] PPI y/y forecast:- prior:- → impact black, nonferrous, chemicals

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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