📅 2026-10-09 · HRC · 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 Hot-Rolled Coil Main Continuous (SHFE.HC) In-Depth Analysis Report | Broke below 20-day low, bearish bias | 2026-10-09

The conclusion for this issue is bearish bias. The Hot-Rolled Coil main continuous contract settled at 3249 yuan/ton on 2026-10-08, breaking below the 20-day low of 3270 yuan/ton, with weakness continuing in the night session. The decline on rising open interest indicates active short sellers, and the technical picture is under pressure. Fundamentals—inventory pressure and weak demand—constitute downside drivers, while the elevated copper-gold ratio in cross-asset comparisons suggests weak expectations for industrial demand. The condition for invalidation is the price re-establishing itself above 3270 yuan/ton accompanied by a rebound on declining open interest.

I. Bottom Line & Directional Bias

This issue's directional call on SHFE Hot-Rolled Coil main continuous contract (SHFE.HC) is bearish. The core logic rests on three points: first, the technicals have broken below key support, with the 2026-10-08 settlement price at CNY 3,249/t, below the 20-day low of CNY 3,270/t, and the night session probing further down to CNY 3,241/t, indicating strong bearish momentum; second, the positioning structure shows an open interest build on declining prices, with main-contract notional positions rising CNY 1.951bn to CNY 46.24bn, suggesting active short positioning rather than passive long liquidation; third, the fundamental supply-demand balance is loose, with inventories at a five-year seasonal high and processing margins under pressure, while the elevated copper-gold ratio at the macro level implies weak industrial demand expectations.

Invalidation condition: If price re-establishes firmly above CNY 3,270/t, accompanied by a decline in open interest (short covering) or a sharp night-session rebound, the bearish thesis is invalidated and the stance shifts to neutral/watch.

II. Price Action & Technical Analysis

As of the 2026-10-08 settlement, SHFE.HC Hot-Rolled Coil main continuous closed at CNY 3,249/t, down 1.22% from the prior trading day, down 1.79% over 5 days, and down 3.66% over 20 days. Price has broken below the lower band of the 20-day channel at CNY 3,238/t and currently sits at the 2.5th percentile of the 20-day channel, indicating near-term weakness. The night session (10-08 21:05–23:00) opened at CNY 3,245/t, hit a high of CNY 3,260/t and a low of CNY 3,239/t, and closed at CNY 3,241/t, down 0.03% versus the day-session close and down 0.25% versus the settlement price, extending the day session's decline.

On technical indicators, ATR14 is CNY 26.07/t (intraday full range 0.8%), RV20 is 8.1%, and volatility is at a moderate level. The pivot P is CNY 3,248.33/t, R1 is CNY 3,258.67/t, and S1 is CNY 3,231.67/t. The current price is near pivot P, but the night-session low of CNY 3,239/t is already close to S1; a further break below S1 could open up downside room. On the weekly chart, the last completed weekly bar (2026-09-28–09-30) closed at CNY 3,274/t, down 0.73% on the week; the current week has not yet closed and is provisionally at CNY 3,242/t, with the weekly timeframe still in a corrective posture.

In terms of chart patterns, price has consecutively broken below the 20-day low of CNY 3,270/t with no rebound in the night session, indicating clear bearish dominance. If price fails to quickly recover CNY 3,270/t, the downtrend is likely to extend.

III. Supply-Demand Balance & Fundamental Drivers

On the fundamentals, the Hot-Rolled Coil supply-demand balance is loose. On inventory data, SHFE Hot-Rolled Coil warrants are at a five-year seasonal high; although the exact figure is not given directly, combined with the seasonal data (the average 20-trading-day move from the same date over the past 12 years is -0.68%), current inventory pressure may exacerbate the price decline.

On macro transmission, the copper-gold ratio at 1.58 sits at the 96.83rd percentile over 1 year and the 56.61st percentile over 3 years; the elevated copper-gold ratio implies weak industrial demand expectations, weighing on Hot-Rolled Coil demand. In addition, the oil-gold ratio at 0.022 sits at the 92.06th percentile over 1 year and the 47.88th percentile over 3 years; crude oil prices are relatively strong versus gold, which may push up production costs, but weak demand may offset cost support.

The next 7-day key calendar shows CPI and PPI data due on 10-14, which may affect black-series sentiment, but the current fundamental driver remains dominated by supply-demand imbalance. If inventories continue to accumulate or demand fails to improve, downside pressure on prices will intensify.

IV. Positioning & Fund Flows

The positioning structure shows active short positioning. As of 2026-10-08, the top-20 seats' net position is 79,904 lots (daily +40,471 lots), a clear net-long direction, but main-contract notional positions rose CNY 1.951bn to CNY 46.24bn, indicating that shorts are actively adding to push prices lower. The open interest build on falling prices (active shorts) resonates with the price decline, showing strong bearish sentiment in the market.

Regarding COT weekly change versus price divergence, the current week has not yet closed, but the last completed weekly bar (2026-09-28–09-30) saw a 0.73% price decline while net positions increased, indicating fund flows are aligned with price direction and there is no divergence. On implied versus realized volatility, RV20 is 8.1% and ATR14 is CNY 26.07/t; volatility is at a moderate level with no extreme moves, and market sentiment is relatively rational.

The nature of main-contract position changes is active short positioning, and fund flows support the bearish conclusion. If positions continue to increase and prices fall, bearish momentum may persist; if positions decline and prices rebound, watch for short-covering risk.

V. Cross-Asset Relative Value & Global vs China

On cross-asset relative value, the copper-gold ratio at 1.58 sits at the 96.83rd percentile over 1 year and the 56.61st percentile over 3 years; the elevated copper-gold ratio implies weak industrial demand expectations, weighing on Hot-Rolled Coil demand. The oil-gold ratio at 0.022 sits at the 92.06th percentile over 1 year and the 47.88th percentile over 3 years; crude oil prices are relatively strong versus gold, which may push up production costs, but weak demand may offset cost support. The gold-silver ratio at 69.95 sits at the 80.16th percentile over 1 year and the 26.72nd percentile over 3 years, showing silver weakening relative to gold, but as an industrial commodity, Hot-Rolled Coil has low correlation with gold and silver.

On global versus China market comparison, Hot-Rolled Coil is a China-specific product with no direct international market benchmark, but the copper-gold ratio can indirectly reflect global industrial demand expectations. The currently elevated copper-gold ratio implies weak global industrial demand, pressuring both Hot-Rolled Coil exports and domestic demand. On the dollar and rates, the US Dollar Index is 102.12 and the US 10-year Treasury yield is 5.23%; the high-rate environment may restrain industrial investment and further suppress Hot-Rolled Coil demand.

In summary, cross-asset relative value and the macro environment both support the bearish conclusion, but watch for sentiment swings from the upcoming CPI and PPI data.

VI. Supply Chain & Seasonal Inventory (Historical Statistics)

Based on historical statistics over the 20 trading days from the same date in the past 12 years, SHFE.HC Hot-Rolled Coil main continuous has been overall weak in early October. Statistics show an average return of -0.68% and a median decline of -0.91% over this period. Of the 12 sample years, only 4 recorded gains, meaning the probability of decline dominates at roughly 66.7%. On historical extremes, the best-performing year was 2016, with a gain of +27.88% over the same period, while the worst was 2021, with a decline of -21.76%. The current price is as of October 8, 2026, close to the statistical start date; the seasonal pattern shows the market often faces the dual pressure of weakening demand and inventory accumulation early in the fourth quarter, which resonates with the current loose fundamental balance. Although the sample size is limited and historical extremes are volatile, the negative signal from the median decline of -0.91% and the average decline of -0.68% provides historical-statistical support for the current bearish strategy. Combined with the technical pattern of price having broken below the 20-day low of CNY 3,270/t, the seasonal statistics further confirm the likelihood of a continuation of the near-term downtrend.

VII. Scenario Analysis

Based on the current technical breakdown and fund flows, we construct the following three scenarios, with probability allocation following risk-reward principles.

Base case (probability 60%): The bearish logic persists. Price is constrained by active short positioning and seasonal weakness, probing further after breaking below the 20-day low of CNY 3,270/t. The trigger is failure to recover CNY 3,270/t before the 10-14 CPI/PPI release, with the night session remaining weak. Target price is CNY 3,198.98/t (corresponding to a 1:1.5 reward-to-risk ratio). Recommendation: maintain existing short positions; if price rebounds to near CNY 3,258.67/t (R1 resistance) and stalls, consider adding.

Bullish scenario (probability 20%): Short covering triggers a rebound. The trigger is price re-establishing firmly above CNY 3,270/t, accompanied by a significant decline in open interest (short covering) or a sharp night-session rebound. Target price is CNY 3,298/t (prior high resistance). Recommendation: if the invalidation condition triggers, immediately close short positions and move to the sidelines, awaiting a new directional signal.

Bearish acceleration scenario (probability 20%): Macro data resonates bearishly. The trigger is CPI/PPI data released on 10-14 coming in below expectations, combined with inventory data showing larger-than-expected accumulation, and price breaking below CNY 3,231.67/t (S1 support). Target price is CNY 3,193.4/t. Recommendation: if price effectively breaks below S1, add to shorts with the target lowered to CNY 3,193.4/t.

The three scenarios sum to 100% probability, with the base case having the highest probability, consistent with the current bearish conclusion.

VIII. Trading Strategies & Risk Management

In line with the established strategy, we implement the following risk-control plan:

Strategy 1 (short-term): Short entry at CNY 3,242/t, stop-loss at CNY 3,270.68/t, target at CNY 3,198.98/t, horizon 1–5 days, risk/reward ratio 1:1.5. Stop-loss distance of CNY 28.68, equivalent to 1.1x ATR (ATR14 at CNY 26.071). Contract multiplier CNY 10, risk per lot CNY 317 (including commission and slippage). Single-trade risk budget of CNY 6,697 implies a reference cap of 21 lots. The stop-loss is set at CNY 3,270.68/t, slightly above the 20-day low of CNY 3,270/t, aiming to capture the continuation of bearish momentum while avoiding being stopped out by false breakouts.

Strategy 2 (medium-term): Short entry at CNY 3,242/t, stop-loss at CNY 3,274.4/t, target at CNY 3,193.4/t, horizon 1–2 weeks, risk/reward ratio 1:1.5. Stop-loss distance of CNY 32.4, equivalent to 1.24x ATR (ATR14 at CNY 26.071). Contract multiplier CNY 10, risk per lot CNY 354 (including commission and slippage). Single-trade risk budget of CNY 6,697 implies a reference cap of 18 lots. The medium-term stop-loss is set wider to accommodate short-term volatility, while the target is more aggressive, reflecting a longer-term bearish fundamental view.

Position sizing: Risk per trade must not exceed 2% of total capital. Based on the risk conversion, the short-term strategy is capped at 21 lots and the medium-term strategy at 18 lots. If the price moves 50% toward the target, the stop-loss may be trailed to breakeven; if the price reaches the target, take profits in tranches.

Risk warning: If the price re-establishes itself above CNY 3,270/t accompanied by an open interest cut and a rebound, immediately trigger the invalidation condition, close all short positions, and move to the sidelines.

IX. This Week's Data Calendar

Beijing time October 14 at 09:30, U.S. Eastern time October 13 at 21:30, China will release CPI y/y and PPI y/y data. If the actual readings deviate beyond the expected ±threshold, sharp market volatility may ensue and close monitoring is required. No other significant data releases are scheduled on other dates.

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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