📅 2026-10-09 · SHFE Aluminum · 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 Aluminum Main Continuous (SHFE.AL) In-depth Analysis Report | Bearish Breakout Downward | 2026-10-09

The current strategy direction is bearish. The core basis is that the price has effectively broken below the lower edge of the 20-day channel, and the night session continued the decline, with clear signs of active short-position increases pressing prices down. Although inventory has slightly decreased, it is insufficient to reverse the trend; narrowing premiums in international and Chinese markets also weaken import support. The short-term target is near pivot S1 23235; if it rebounds above R1 23650, the outlook needs to be reassessed.

I. Bottom Line & Directional Bias

This report's directional call on SHFE Aluminum main continuous contract (SHFE.AL) is bearish. The core logic rests on three points: First, the price structure has broken down — the 10-08 settlement price of 23585 is approaching the lower band of the 20-day channel at 23350, and the 10-09 night session probed further down to 23220, confirming the downtrend. Second, fund flows indicate short-side dominance: main-contract notional positioning of CNY 31.6bn rose CNY 1.361bn on the day, exhibiting a typical open-interest-build decline, indicating active short positioning to push prices lower. Third, although warrant destocking is underway on the supply-demand side, LME inventories remain elevated, and the China premium is only +1.5%, with the import window not significantly open, failing to form effective support.

Invalidation conditions: If the price closes above the upper band of the 20-day channel at 24675 for two consecutive sessions, or the night session rebounds above pivot R1 at 23650, the bearish thesis is invalidated and the stance shifts to neutral/watch.

II. Price Action & Technicals

As of the 2026-10-08 settlement, the SHFE.AL main contract closed at 23385 with a settlement price of 23585, down 2.15% from the prior session. The 5-day cumulative decline is 3.39% and the 20-day decline is 2.97%, signaling a marked weakening of short-term momentum. The price has broken below the 20-day channel lower band at 23350, sitting only 2.6% within the channel — a bearish technical posture. In the night session, from 10-08 21:05 to 10-09 01:00, SHFE Aluminum opened at 23260, hit a high of 23365, a low of 23195, and closed at 23220, down 0.71% versus the day-session close and down 1.55% versus the settlement price, further confirming the continuation of bearish momentum.

On volatility indicators, ATR14 stands at 236.07, with an intraday full range of 1.01% and RV20 at 11.5%, indicating a recent pickup in volatility. Pivot analysis shows Pivot P at 23500, resistance R1 at 23650, and support S1 at 23235. The current price of 23220 (night session) is already near S1 at 23235; a break below this level could open further downside. On the weekly chart, the last completed weekly candle (2026-09-28 to 2026-09-30) closed at 23830, down 1.53% on the week; the current week is not yet closed, tentatively at 23385, with the weekly timeframe still in a corrective posture. Overall, the technicals show a bearish alignment, with the near-term target at S1 23235; if effectively broken, look toward the area below the 20-day channel lower band.

III. Supply-Demand Balance & Fundamental Drivers

On the supply-demand fundamentals, inventory data is diverging. LME aluminum inventories stand at 238,875 tonnes (as of 2026-10-07), unchanged on the day, with a cumulative draw of 5,650 tonnes over the last 20 periods, suggesting some relief in global inventory pressure but of limited magnitude. SHFE warrants total 118,396 tonnes (as of 2026-10-08), down 3,467 tonnes on the day, a 2.84% decline, indicating an acceleration in China warrant destocking that provides some support to prices. However, this destocking has not materially altered the overall supply-demand balance, as absolute inventory levels remain at historically elevated levels.

On macro transmission, the US Dollar Index (DXY) is at 102.11 and the 10-year UST yield at 5.23%, with the high-rate environment weighing on commodity prices. The China premium is +1.5% (2026-10-08), narrowing from -1.62% five days prior, indicating a shrinking spread between international and China markets; the import window is not significantly open, weakening the independent upside momentum of China prices. Additionally, over the next 7 days, focus is on the CPI and PPI releases on 10-14; if the data surprise, they could further affect macro sentiment, but current fundamentals are insufficient to support a price rebound.

Overall, supply-demand contradictions are not pronounced, inventory destocking is limited, and macro headwinds are evident, leaving prices under significant downside pressure.

IV. Positioning & Fund Flows

The positioning structure shows short-side dominance. The top 20 seats hold a combined 434,066 lots, up 11,408 lots on the day; long positions total 450,594 lots, up 15,934 lots on the day; short positions total 450,594 lots, up 15,934 lots on the day; net shorts stand at 16,528 lots, down 4,526 lots on the day. Notably, although net shorts have declined, main-contract notional positioning of CNY 31.6bn rose CNY 1.361bn on the day, exhibiting an open-interest-build decline, indicating active short positioning to push prices lower rather than short covering.

Regarding COT weekly change versus price divergence, prices fell while open interest rose, showing strong willingness among shorts to actively buy in. On implied versus realized volatility, RV20 is 11.5% and ATR14 is 236.07, indicating a rise in market volatility, though no extreme moves have occurred; fund flows remain dominated by the short side. Overall, the positioning structure suggests bearish market sentiment, with the short side in the ascendancy.

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

On cross-asset relative value, the gold/silver ratio is 69.95 (2026-10-08), at the 80.16th percentile over 1Y and the 26.72nd percentile over 3Y, indicating gold outperforming silver. The copper/gold ratio is 1.58, at the 96.83rd percentile over 1Y and the 56.61st percentile over 3Y, indicating copper outperforming gold, reflecting growth expectations. The oil/gold ratio is 0.022, at the 92.06th percentile over 1Y and the 47.88th percentile over 3Y, indicating crude oil underperforming gold. The crack spread is USD 69.72/bbl, indicating refining margins remain decent.

On global versus China market valuation, SHFE.AL versus LME.AL shows a China premium of +1.5% after tax adjustment (2026-10-08), narrowing from -1.62% five days prior, indicating a shrinking spread between international and China markets; the import window is not significantly open. A narrowing China premium means China prices are losing their relative advantage versus international markets, and import pressure may increase, further weighing on China prices. Overall, cross-asset valuations show the metals complex is broadly weak, with aluminum prices under dual pressure from macro and supply-demand factors, facing significant downside risk.

VI. Supply Chain & Seasonal Inventory (Historical Statistics)

Based on historical statistics of the same date over the past 15 years covering the subsequent 20 trading days, SHFE Aluminum main continuous exhibits a seasonally weak pattern. Statistics show an average return of -1.68% for this period, with a median decline of -0.45%. In the 15-year sample, only 6 years posted gains, with declining years dominating and a win rate below 40%. On historical extremes, the best year was 2016, with a gain of +6.04% over the same period; the worst year was 2021, with a decline as deep as -17.85%. The market is currently in October 2026; from a seasonal statistics perspective, the probability of a decline in the same historical period is high, with negative average returns, which resonates statistically with this report's bearish directional call. Although seasonality is not an absolute rule, combined with the current technical features of a break below the 20-day channel lower band and short-side open interest build, seasonal factors further enhance the credibility of the downside expectation. Historical data indicate that in the absence of a major supply-demand reversal or macro tailwind, aluminum prices tend to face seasonal selling pressure during this period, and investors should be alert to the risk of seasonal lows.

VII. Scenario Analysis

Based on the current technical breakdown and fund flows, we construct three scenarios:

Base case (probability 60%): Prices extend the bearish trend and test lower support. Trigger conditions: the price fails to effectively reclaim the 20-day channel upper band at 24675, and the night session rebound fails to hold above pivot R1 at 23650. In this scenario, prices will test lower toward the S1 support at 23235; if effectively broken, the target is the area below the 20-day channel lower band at 23350. Operationally, maintain a bearish bias, positioning shorts on rallies, and watch the validity of support near 23235.

Bullish case (probability 20%): Prices stage an oversold rebound and repair the technical pattern. Trigger conditions: the price holds above the 20-day channel upper band at 24675 for two consecutive sessions, or the night session effectively breaks above pivot R1 at 23650 and holds. If triggered, the bearish thesis is invalidated, shifting to neutral/watch, with a near-term target near the 20-day channel midline at 24012. Operationally, shorts must stop-loss and exit, awaiting confirmation of a new direction before repositioning.

Bearish acceleration case (probability 20%): Macro headwinds or inventory data surprise, accelerating the price decline. Trigger conditions: the price breaks below S1 at 23235 while open interest continues to rise sharply, indicating intensifying active short pressure. In this scenario, the target is the 23000 psychological level, or even lower. Operationally, add to shorts after a break below 23235, with a stop-loss set above 23450.

The three scenarios sum to 100% probability, with the base case having the highest probability, consistent with the current bearish directional bias. Investors should dynamically adjust strategies based on whether prices reach key levels, strictly adhering to the invalidation conditions.

VIII. Trading Strategies & Risk Management

The strategy set out in this report is: short / entry 23,450 / stop-loss 23,722 / target 23,078 / horizon 1–2w / risk-reward 1:1.4. The strategy is strictly based on the current technical structure and risk budget. The stop-loss at 23,722 is placed below the upper edge of the 20-day channel at 24,675, designed to guard against the bearish thesis failing should prices effectively hold above that level. The stop distance of 272 equals 1.15×ATR (ATR14 236.07), ensuring it is not easily triggered within normal volatility. Risk per lot is CNY 1,420 (including commission and slippage), and the single-trade risk budget of CNY 6,697 corresponds to a reference cap of 4 lots. Position sizing should be adjusted dynamically against the account's total risk budget, ensuring a single loss does not exceed 1% of total capital. Add/trim rules: if price breaks below 23,235 with rising open interest, add to short positions and move the stop-loss up to 23,500; if price rebounds to around 23,650 and stalls, consider trimming. The 1–2w horizon covers the current seasonal weakness window. During execution, monitor the 10-14 CPI and PPI releases closely; if the prints surprise, they may shift macro sentiment and the stop-loss should be adjusted in a timely manner.

IX. This Week's Data Calendar

Beijing time 10-14 09:30, the US releases CPI y/y and PPI y/y on 10-13 21:30; expectations and prior values are TBD, with high impact on the black, nonferrous and chemicals sectors. The data may trigger market volatility and warrants close attention. No other calendar events for now.

This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.

Single-name briefs Deep dive

SHFE GoldSHFE.AU 2026-10-09

Shanghai Gold (SHFE.AU) In-depth Analysis Report | Bullish Bias: Gold-to-Silver Ratio at Low Levels | 2026-10-09

SHFE Aluminum Main Continuous (SHFE.AL) In-depth Analysis Report | Bearish Breakout Downward | 2026-10-09

Today's Risk Map

Single-name briefs Deep dive

Previous briefs

⟠ This month's strategy backtest