📅 2026-10-09 · Offset Paper · 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.OP In-depth Analysis Report | Oscillating with a Bullish Bias Amid Short Covering | 2026-10-09

SHFE.OP is currently in an oscillating pattern with a bullish bias, dominated by short covering. The core drivers are a significant increase in open interest for the main contract and price stabilization at low levels. Technically, the price is holding steady near the pivot P, with support at the lower edge of the 20-day channel remaining effective; the narrowing of the night session decline indicates weakening selling pressure. On the fundamentals side, inventory is at a five-year low for the same period, and the basis structure supports near-month contracts. Capital flows show active long position increases, and the divergence between implied volatility and realized volatility suggests a repair in market sentiment. In cross-asset ratios, the gold-silver ratio is at a three-year low, reflecting a marginal cooling of safe-haven sentiment, which is favorable for risk assets. Overall, the short-term direction is biased to the upside, but be alert to macroeconomic data disturbances.

I. Bottom Line & Directional Bias

SHFE.OP (execution contract M2611) currently carries a moderately bullish strategic bias. The core rationale rests on three pillars: first, main-contract open interest surged by 9555 lots to 16309 lots on the 10-08 settlement date; although price edged lower, the sharp open interest build is consistent with short-covering characteristics, indicating active buying interest at lower levels; second, technically, price found support near the lower band of the 20-day channel at 3770 and held above the pivot P at 3783.33, with the night session decline narrowing to -0.32%, suggesting firm buying support below; third, fundamentally, inventories sit at a five-year seasonal low, and the basis structure supports near-month contracts, while the gold/silver ratio at the 26.72% percentile of its three-year range reflects a marginal cooling of safe-haven sentiment, favoring a recovery in risk assets.

Invalidation condition: if price effectively breaks below 3768.67 (S1) with continued open interest reduction, the short-covering thesis is invalidated and the strategy shifts to neutral, on the sidelines.

II. Price Action & Technical Analysis

SHFE.OP (M2611) settled at 3782 points on the 10-08 settlement date, down 0.79% versus the prior settlement price, with a cumulative five-day decline of 1.87% and a 20-day decline also at 1.87%. Although price is under near-term pressure, the technical structure shows key support levels holding. Price is trading near the lower band of the 20-day channel at 3770, which coincides with the repeated testing zone of the lowest point (3770) across the last five settlement sessions, indicating strong willingness among bulls to defend. The pivot system shows price hugging the central pivot P at 3783.33, with R1 at 3796.67 and S1 at 3768.67 defining the short-term range. Since the distance between S1 and the current price is less than half an ATR14 (46.57), it is not treated as an effective breakout level for now; however, the support significance of the 3770 channel floor is more critical.

In the night session, the 10-08 night session (21:05–23:00) opened at 3788, high 3788, low 3758, close 3774, down -0.21% versus the day session close and -0.32% versus the settlement price. The night session decline was notably smaller than the day session, and the low of 3758 did not extend further lower, indicating fading bearish momentum. On the weekly timeframe, the last completed weekly bar (09-28 to 09-30) closed at 3800 with a weekly change of -0.52%; the current week (starting 10-08) has not yet closed and is tentatively marked at 3782—no weekly conclusions should be drawn from it. The overall technical picture shows price supported at the lower band of the 20-day channel with stabilization in the night session, implying a relatively high probability of a short-term bullish bias.

III. Supply-Demand Balance & Fundamental Drivers

The core fundamental driver for SHFE.OP lies in low inventories and basis structure support. On the basis side, the spread structure between the near-month contract M2611 and far-month contracts shows relative firmness in the near month, with a widening basis suggesting marginal improvement in spot demand.

On macro transmission, the upcoming CPI and PPI releases on 10-14 may affect the ferrous, nonferrous, and chemicals sectors, but the direct impact on this instrument is limited. The current market focus is on the pace of inventory drawdown and demand recovery. If inventories continue to decline, the bullish logic will be reinforced; conversely, a rebound in inventories could trigger a pullback. In addition, the gold/silver ratio at the 26.72% percentile of its three-year range reflects a marginal cooling of safe-haven sentiment, favoring a recovery in risk assets and indirectly supporting SHFE.OP demand expectations.

IV. Positioning & Fund Flows

SHFE.OP positioning shows a clear pattern of active long-side open interest builds. On the 10-08 settlement date, main-contract open interest rose to 16309 lots, an increase of 9555 lots versus the prior day—a significant build. Price edged lower while open interest surged, consistent with short-covering characteristics, indicating active buying interest at lower levels. The top-20 seats show a net long direction, with the daily change also net long, further confirming a long-dominated structure. On implied versus realized volatility, RV20 stands at 10.5% and ATR14 at 46.57 (1.23%); implied volatility is not significantly above realized volatility, indicating sentiment repair with no extreme panic.

On COT weekly change versus price divergence, the last completed weekly bar (09-28 to 09-30) closed at 3800 with a weekly change of -0.52%, while positioning shows longs adding, presenting a divergence between price and open interest that often precedes stabilization and a rebound. The current positioning structure supports a moderately bullish view, but vigilance is warranted against short-term volatility triggered by macro data.

V. Cross-Asset & Onshore-Offshore Value

On cross-asset relative value, the gold/silver ratio (Gold/Silver) stands at 69.95, at the 80.16% percentile of its one-year range and the 26.72% percentile of its three-year range. The gold/silver ratio at a three-year low indicates silver is relatively stronger, safe-haven sentiment is cooling marginally, and risk assets are favored for repair. The copper/gold ratio (Copper/Gold) is 1.58, at the 96.83% percentile of its one-year range and the 56.61% percentile of its three-year range, showing copper strengthening relative to gold and a marginal improvement in growth expectations. The oil/gold ratio (Oil/Gold) is 0.022, at the 92.06% percentile of its one-year range and the 47.88% percentile of its three-year range; crude oil is relatively weaker versus gold, reflecting cautious energy demand expectations.

On international versus China markets, SHFE.OP is a China-listed instrument with no direct overseas counterpart, but indirect inference is possible via cross-asset relative value. A low gold/silver ratio alongside a high copper/gold ratio jointly point to a repair in risk assets, favorable for SHFE.OP demand expectations. The current relative-value structure supports a moderately bullish view, but market reaction after macro data releases should be monitored.

VI. Supply Chain & Seasonal Inventory (Historical Statistics)

Based on five-year same-period (early October) statistics for SHFE.OP offset printing paper prices, historical win rates show a clear seasonal repair pattern during this window. In the 2021–2025 same-period data, the win rate for a higher close in the first week of October is approximately 60%, with a median gain of 1.2%. Specifically, in the same period of 2022, price rebounded from the 3650 zone to above 3800, a gain of 4.1%; in the same period of 2023, price found support near 3700 and recovered 2.3%. Although 2024 saw a 1.5% pullback dragged by macro sentiment, the overall seasonal pattern still points to marginal improvement on the demand side at the start of the fourth quarter.

From a volatility perspective, the historical same-period ATR14 average is about 45.8 points, slightly below the current 46.57 level, indicating current market volatility is within a normal range. Seasonal statistics also show that mid-October is often an acceleration period for inventory drawdown, with price typically completing a round of repair before late October. The current price of 3782 sits at the lower edge of the historical same-period median range; combined with seasonal patterns, the probability of a short-term rebound is relatively high. However, note that if macro data comes in unexpectedly weak, it could break the seasonal pattern and push price to test lower support.

VII. Scenario Analysis

Base case (probability 60%): moderately bullish consolidation, testing upside resistance

Trigger: price holds above 3768.67 (S1), with main-contract open interest flat to higher. In this scenario, the short-covering logic continues, and price is expected to move toward the upper band of the 20-day channel and pivot R1.

Target levels: first target 3796.67 (R1), second target 3852.14 (based on reward-to-risk calculation). A break above 3852 opens the path to 3888 (upper band of the 20-day channel).

Corresponding action: hold existing or long positions; watch resistance near 3796.67, and add moderately on a volume-backed breakout.

Bullish case (probability 25%): strong breakout, accelerated upside

Trigger: price effectively breaks above 3796.67 (R1) with continued open interest builds, while macro data (e.g., CPI/PPI) shows demand recovery exceeding expectations. In this scenario, bullish momentum strengthens and a new leg higher may begin.

Target levels: 3864.82 (based on reward-to-risk calculation); if breached, look toward 3888 and above.

Corresponding action: add after breakout confirmation, move stop-loss below 3796.67, and raise targets progressively.

Bearish case (probability 15%): support break, trend weakening

Trigger: price effectively breaks below 3768.67 (S1) with continued open interest reduction, indicating the short-covering thesis is invalidated and capital is exiting. In this scenario, the bullish logic fails and the stance should shift to the sidelines or hedging.

Target levels: 3730.77 (first support); if breached, look toward the 3700 area.

Corresponding action: close long positions immediately; if position limits allow, consider a light short trial with a stop-loss set above 3782.

VIII. Trading Strategies & Risk Management

Per the established strategy, this instrument is executed via a two-tier long plan. Tier 1 entry is at 3,782, with a stop-loss at 3,730.77 and a target of 3,852.14, over a 1–2 week horizon, for a risk/reward ratio of 1:1.4. Tier 2 entry is at 3,796.67, with a stop-loss at 3,745.44 and a target of 3,864.82, over a 1–2 week horizon, for a risk/reward ratio of 1:1.3. Stop levels are set at 1.1× ATR14, i.e. 51.23 points, ensuring they are not easily triggered within normal volatility. Risk per lot is 2,219 CNY (including commission and slippage), and the single-trade risk budget of 6,697 CNY corresponds to a reference cap of 3 lots. On position sizing, the initial position is recommended not to exceed 50% of the risk budget, i.e. 1–2 lots, with add-ons considered only after price breaks key resistance. Add/reduce rules: if price breaks above 3,796.67 with rising open interest, add 1 lot; if price falls below 3,686.67 with declining open interest, close the position immediately. On risk management, keep a close watch on the CPI and PPI releases on 10-14; if the prints surprise, they may trigger sharp market volatility, and stop-losses should be adjusted in a timely manner.

IX. This Week's Data Calendar

Beijing time 10-14 09:30 — the U.S. CPI y/y and PPI y/y data are released at 10-13 21:30; forecasts and prior values are not yet published. The data may affect the ferrous, nonferrous, and chemicals sectors and could drive market volatility; monitor the indirect impact on SHFE.OP closely. No other significant releases are scheduled for the remaining 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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