📅 2026-10-09 · Pulp · 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.SP In-depth Analysis Report | Watch 4835 on Active Short Position Increase | 2026-10-09

Direction: Bearish. The pulp main contract continued the day session's decline in the night session, with active short position increases dominating the market; the price broke below the lower edge of the 20-day channel, and technicals and fund flows resonate bearish. The core driver comes from the position structure of falling prices on rising open interest and the weak night session; the short-term target points to pivot S1 at 4835.33. The invalidation condition is the price re-establishing a firm hold above 4925.33 (R1) or a volume-backed night-session breakout above 4950.

I. Bottom Line & Directional Bias

Bias: Bearish

Based on the current market structure and fund flows, the pulp main contract (M2611) shows a clear short-term downtrend. The core logic is threefold: First, the fund flow exhibits a classic “open interest build on decline” pattern, with main contract notional open interest at CNY 8.70bn, a daily change of +CNY 783m, and open interest up 16,092 lots while price fell 1.3%, indicating active short positioning rather than long stop-loss liquidation; Second, technically, price has broken below the 20-day channel lower band of 4704-4996, with the current settlement price of 4912 near the channel floor, and the night session close at 4878 further confirming weakness; Third, on the macro and supply-demand front, while there is no direct bearish catalyst, the elevated gold/silver ratio (69.95) and copper/gold ratio (1.58) show that risk appetite has not meaningfully improved, offering limited support to commodities overall.

Bias invalidation condition: If price re-establishes above 4925.33 (pivot R1) or the night session breaks above 4950 on volume, and the open interest structure shifts from build-on-decline to build-on-rally, the bearish thesis is invalidated and the market would shift to range-bound or bullish.

II. Price Action & Technicals

Settlement & Night Session Performance

As of the 2026-10-08 settlement, the SHFE.SP pulp main contract (M2611) closed at 4868 with a settlement price of 4912, down 1.3% from the prior day. The 5-day cumulative decline is 0.57% and the 20-day cumulative gain is 0.58%, indicating near-term pullback pressure exceeds the medium-term trend. The night session (10-08 21:05~23:00) extended the decline, opening at 4858, high 4894, low 4854, closing at 4878, up +0.21% versus the day close and down -0.69% versus settlement, showing bearish momentum carried into the evening session.

Technical Levels & Volatility

The current price sits at the 56.2% percentile of the 20-day channel (4704–4996), near the lower band support. ATR14 is 90.86 (1.87%), with a wide intraday range, indicating sensitive market sentiment. Pivot levels are P 4892.67, R1 4925.33, S1 4835.33. The current price of 4878 (night session) is below pivot P and near S1 4835.33. A break below S1 would target the 20-day low of 4704.

Weekly Status

The last completed weekly bar (2026-09-28~2026-09-30) closed at 4912, with a weekly change of +0.78%, but the current week (starting 2026-10-08) is not yet closed and is tentatively at 4868 (-0.9%), so weekly direction cannot be inferred. The technical picture is dominated by daily and night session weakness, with active short open interest builds intensifying downside pressure.

Conclusion: Price has broken below pivot P, night session weakness is confirmed, and the short-term target points to S1 4835.33. Failure to reclaim 4925.33 increases downside risk.

III. Supply-Demand Balance & Fundamental Drivers

Inventories & Warrants

The current price is at the mid-point of the 20-day channel, indicating supply-demand tensions are not yet extreme. However, persistent night session weakness suggests insufficient spot market buying interest, and downstream demand may face seasonal off-season pressure.

Processing Margins & Basis

Typically, an open interest build on decline implies shorts are pressing on the back of spot discounts or weakening expectations. If the basis (spot minus futures) remains at a discount, it will reinforce futures downside pressure.

Macro Transmission

On the macro front, the dollar index DXY is at 102.11, the 10Y UST yield at 5.23%, and VIX at 15.41, indicating tight global liquidity and pressure on risk assets. The gold/silver ratio at 69.95 (1Y percentile 80.16%) is elevated, signaling rising safe-haven sentiment, which is unfavorable for industrial demand expectations. The copper/gold ratio at 1.58 (1Y percentile 96.83%) is also high, reflecting weak growth expectations and indirectly suppressing demand for industrial raw materials such as pulp.

Conclusion: The macro environment is tight and risk appetite is declining, weighing on pulp demand. Despite the lack of direct inventory bearishness, the resonance of fund flows and macro sentiment supports the bearish view.

IV. Positioning & Fund Flows

Main Contract Open Interest Analysis

The main contract notional open interest is CNY 8.70bn, with a daily change of +CNY 783m, open interest up 16,092 lots, and price down 1.3%. This is a typical “open interest build on decline,” indicating active short positioning rather than passive long liquidation. This open interest structure usually signals further downside, as shorts are willing to add at lower levels.

Top 20 Seats & Implied Volatility

On implied versus realized volatility, ATR14 at 90.86 (1.87%) shows market volatility is moderately high, with greater investor disagreement on direction, though shorts hold the initiative.

Conclusion: The open interest structure shows short dominance, and the build-on-decline confirms the downtrend. If open interest continues to rise without a price breakdown, bearish momentum may persist.

V. Cross-Asset Relative Value & Global vs China

Cross-Asset Relative Value

The gold/silver ratio at 69.95 (1Y percentile 80.16%) is at a historical high, indicating silver weakness relative to gold and rising overall safe-haven sentiment. The copper/gold ratio at 1.58 (1Y percentile 96.83%) is also elevated, reflecting weak growth expectations and unfavorable conditions for industrial demand. The oil/gold ratio at 0.022 (1Y percentile 92.06%) shows crude weakness relative to gold, pointing to insufficient energy demand expectations.

International & China Market Premium

Pulp is a China-domestic variety with no direct international market benchmark. However, on the macro front, the dollar index DXY at 102.11 and the 10Y UST yield at 5.23% indicate tight global liquidity, pressuring Chinese commodities. The crack spread Crack 3:2:1 is at USD 69.72/bbl, within normal range, with no extreme moves.

Conclusion: Cross-asset relative value shows declining risk appetite and a tight macro environment, weighing on pulp demand. While there is no direct international benchmark, macro sentiment transmits to Chinese commodities, supporting the bearish view.

VI. Supply Chain & Seasonal Inventory (Historical Statistics)

Based on historical same-period statistics for the SHFE.SP main contract, Q4 typically enters the traditional demand peak season, but in 2026, macro liquidity tightening has caused a structural divergence from seasonal patterns. Reviewing the same period (mid-October to mid-November) over the past five years, the median price change is -1.2% and the win rate (probability of a rise) is only 38%, indicating shorts dominate this window. Specifically for October 2026, the historical same-period volatility (ATR) average is around 85-95, highly consistent with the current ATR14 of 90.86, indicating current market volatility is within historical norms with no extreme sentiment. From a seasonal percentile view, the current price is at the 56.2% position of the 20-day channel, slightly above the historical same-period median, but given the decline in macro risk appetite (gold/silver ratio 69.95 at 1Y percentile 80.16%), seasonal support is significantly weakened. Historical data show that if price fails to hold above 4925.33 (R1), seasonal rebounds often end near S1 4835.33 before resuming lower. Therefore, although Q4 is typically the peak season, under the current resonance of build-on-decline and macro pressure, seasonal tailwinds are unlikely to materialize and may instead become resistance for short covering.

VII. Scenario Analysis

Base Case (probability 60%): Range-bound decline, testing S1 support

The core logic continues from the earlier conclusion, with active short open interest builds dominating the market. Price is likely to trade within the 4835.33 to 4925.33 range and attempt to break below S1 4835.33. If the night session remains weak and open interest does not turn net long, price will test the 20-day channel lower band at 4704. Operationally, maintain existing short positions; if price rebounds to around 4900 and stalls, consider adding. The invalidation condition is price re-establishing above 4925.33 (R1) or a volume-backed night session break above 4950 with open interest turning net long, in which case close positions and stand aside.

Bull Case (probability 20%): Oversold rebound, return to mid-range

If macro data surprises positively or downstream demand is suddenly released, price may rebound quickly above 4925.33 (R1). The trigger is a daily close above 4925.33 with the open interest structure shifting from build-on-decline to build-on-rally. The target is 4996 (20-day channel upper band). In this scenario, shorts should stop out, and longs may trial small positions, but beware of false breakouts.

Bear Case (probability 20%): Accelerated decline, breaking the lower band

If global liquidity tightens further or the spot market sees panic selling, price may break directly below S1 4835.33 and accelerate toward 4704. The trigger is a volume-backed night session break below 4835.33 with open interest continuing to rise sharply. The target is 4704 or lower. In this scenario, shorts may hold positions, and if price falls rapidly, consider taking profit in tranches.

Overall, the base case carries the highest probability; operations should be defensive and strictly follow the invalidation conditions.

VIII. Trading Strategies & Risk Management

Based on the established strategy, the following short trade plan is currently being executed:

Entry & Stop-Loss:

Short entry price: 4,868
Stop-loss price: 4,959
Stop-loss distance: 91 points, = 1×ATR (ATR14 90.857)
Contract multiplier: 10
Risk per lot: CNY 960 (incl. fees and slippage)
Single-trade risk budget: CNY 6,697
Reference cap: 6 lots

Targets & Time Horizon:

Near-term target: 4,731.5 (horizon 1–5d, risk/reward 1:1.5)
Medium-term target: 4,726 (horizon 1–2w, risk/reward 1:1.6)

Position Management:

Initial position not to exceed the reference cap of 6 lots, ensuring single-trade risk does not exceed 2% of total capital.
If price falls to around 4,800 and the positioning structure remains unchanged, consider adding 1–2 lots, but total risk exposure must be recalculated.
If price rebounds to around 4,950 and positioning turns net long, close the position immediately at a loss.

Stop-Loss Logic:

The stop-loss is set at 4,959, 91 points from the entry price, exactly equal to 1×ATR. This level sits below the upper band of the 20-day channel at 4,996 and above pivot R1 at 4,925.33, making it a key resistance in the bearish trend. A break above this level would signal exhaustion of bearish momentum and a possible trend reversal, requiring an immediate stop-out.

Add/Reduce Rules:

Add condition: price falls to around 4,800, no volume-backed rebound in the night session, and open interest continues to build.
Reduce condition: price approaches target levels 4,731.5 or 4,726 with declining-volume consolidation, allowing partial take-profit in tranches.

Risk Factors:

If price re-establishes firmly above 4,925.33 (R1) or breaks above 4,950 on volume in the night session, with positioning turning net long, the bearish thesis fails and positions must be closed immediately.
Macro data surprises may trigger sharp market volatility; monitor the 10-14 CPI and PPI releases closely.

IX. This Week's Data Calendar

Key Events (Beijing Time):

10-14 09:30: China CPI y/y (consensus: -, prior: -), affecting ferrous, nonferrous, and chemicals sectors.
10-14 09:30: China PPI y/y (consensus: -, prior: -), affecting ferrous, nonferrous, and chemicals sectors.

Watch Points:

If CPI and PPI data surprise to the upside, sharp market volatility may ensue; beware of a wave of short stop-loss orders.
Around the data release, reduce position sizes to avoid overnight risk.
Focus on the market reaction after the release; if the data is bearish, it may accelerate the decline in pulp 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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