1. Bottom Line & Directional Bias
Directional bias: bearish. Iron ore I2701 [10-09 settlement] at 683.5 CNY/t, down 1.16%, with a 5-day decline of 4.34% and a 20-day decline of 6.06%. Price sits at the 6th percentile of the 20-day channel of 678.5–745, hugging the lower bound. Core reason one: the driving force is active short-side open interest build. Main contract notional open interest stands at 42.25 billion CNY, up 944 million CNY on the day; open interest rose by 13,828 lots while price fell, indicating open-interest-driven selling rather than short covering. Core reason two: the top-20 net short position is 42,049 lots (down 13,984 lots on the day), with the net short structure persisting and no reversal signal in seat structure. Core reason three: the technical pivot P is 683, settlement is capped below the pivot, R1 at 687.5 forms overhead resistance, and ATR14 is 10.5 (1.54%), leaving ample volatility room. Invalidation condition for the bearish view: a daily close firmly above 687.5 accompanied by a decline in open interest would invalidate the bearish logic; conversely, a break below 678.5 (the 20-day channel lower bound) opens downside toward 667.5.
2. Price Action & Technicals
Iron ore I2701 [10-09 settlement] at 683.5 CNY/t, down 1.16% versus prior settlement; down 4.34% over 5 days and 6.06% over 20 days, with a clear medium-term downtrend. The 20-day channel is 678.5–745, and the current position is at only the 6th percentile, with price running tightly along the lower bound. The lower-bound support and S1 (678) nearly coincide, forming a key observation zone. ATR14 is 10.5 (1.54% of price), RV20 is 16.4%, and realized volatility is in a relatively elevated range for the year, implying intraday amplitude of roughly 10 points. Pivot system: P at 683, R1 at 687.5, S1 at 678; settlement at 683.5 is 0.5 point above P but has not effectively held above it. The distance from R1 to spot is 4 points (about 0.4×ATR), not yet a valid breakout signal. The last five settlement daily bars: 09-28 settled 705, 09-29 settled 699, 09-30 settled 702.5, 10-08 settled 682.5, 10-09 settled 682.5. After the 10-08 long bearish daily candle broke below the 700 round number, price consolidated at low levels for two consecutive sessions with weak rebounds. The most recent completed weekly bar (2026-09-28 to 09-30) opened 711.5, high 711.5, low 698, settled 702.5, down 1.54% on the week; this week (from 10-08) has not yet closed and is tentatively at 682.5 (-2.85%), so no weekly conclusion is drawn. On the night session, 10-09 night session from 21:05 to 23:00 opened 681.5, high 686, low 681.5, settled 684, up 0.22% versus the day-session close and up 0.07% versus settlement. The night session saw a modest repair but did not change the weak daily structure.
3. Supply-Demand Balance & Fundamental Drivers
The international versus China price comparison shows China's tax-adjusted equivalent premium at +7.51% [10-09], widening by 0.59 percentage points from +6.92% five days ago. The China market is relatively expensive versus the international market, and the import window is inclined to open, theoretically exerting upside pressure on the China board. The international market SGX FEF=F [10-09 settlement] is at 91.25 USD, 1D +0.27%, 5D -0.38%, 20D -5.19%, with a 20-day channel of 90.8–97.3 and a position at the 6.9th percentile, and a 52-week range of 90.8–111.85. The international market is likewise hugging the 20-day lower bound, and the international and China markets are resonating on the weak side. On macro transmission, the next seven days are calendar-heavy: 10-14 brings CPI and PPI y/y, and 10-19 brings a package including fixed asset investment, industrial production, retail sales, real estate development investment, new home prices, energy production, and capacity utilization, all flagged as affecting the ferrous complex. If property and fixed-asset investment data come in weak, it will reinforce pessimistic demand expectations for iron ore. On seasonality, over the past 13 years, the average 20-trading-day change from the same date is -2.39%, the median is -4.71%, and only 4 of 13 years were positive. The best year was 2016 at +22.99% and the worst was 2021 at -28.46%. Seasonality is weak but the sample is limited, so it serves only as background. Main contract notional open interest is 42.25 billion CNY, up 944 million CNY on the day; settled capital is rising while price is falling, reflecting active short-side capital entry.
4. Positioning & Fund Flows
On positioning structure, the top-20 seats hold combined open interest of 1,778,159 lots [10-09], with long positions at 868,055 lots (up 3,574 lots on the day) and short positions at 910,104 lots (up 17,558 lots on the day), leaving a net short of 42,049 lots (down 13,984 lots on the day). The increase in short positions is significantly larger than that in long positions, but the daily net short narrowed, indicating some shorts took profit and exited. The net short structure remains unchanged, though the margin has eased somewhat. Main contract notional open interest is 42.25 billion CNY, up 944 million CNY on the day; open interest rose by 13,828 lots while price fell 1.16%, forming open-interest-driven selling, consistent with active short-side accumulation rather than long liquidation or short covering. Iron ore RV20 is 16.4%, in a relatively elevated range. If implied volatility subsequently rises as price declines, it will reinforce bearish sentiment; conversely, if volatility retreats, the pace of downside may slow.
5. Cross-Asset & Onshore-Offshore Value
On cross-asset relative value, [10-09] the copper-gold ratio is 1.59, at the 98.02nd percentile on a 1-year basis and the 58.33rd percentile on a 3-year basis, sitting at a one-year high and reflecting relatively firm growth expectations. This diverges from iron ore's 20-day decline of 6.06%, suggesting the ferrous complex is driven by its own supply-demand dynamics rather than macro risk appetite. The oil-gold ratio is 0.0218, at the 89.68th percentile on a 1-year basis and the 47.09th percentile on a 3-year basis, also at a one-year high. The gold-silver ratio is 69.07, at the 74.6th percentile on a 1-year basis and the 24.87th percentile on a 3-year basis: elevated on a one-year window but low on a three-year window, meaning silver has been relatively weak versus gold over the past year but relatively strong over a three-year window. On rates and FX: ^TNX (U.S. 10-year Treasury yield) is 5.244 [10-09], up 0.25% on the day; DXY is 102.21, up 0.07% on the day. The dollar and Treasury yields firmed modestly, exerting marginal pressure on USD-denominated commodities. On international versus China markets, iron ore is a comparable instrument. China's tax-adjusted equivalent premium is +7.51% [10-09] (versus +6.92% five days ago), meaning the China market is relatively expensive versus the international market and the import window is inclined to open. The widening premium exerts upside pressure on the China board. The international market FEF=F [10-09 settlement] is at 91.25 USD, down 5.19% over 20 days and at the 6.9th percentile, with both international and China markets hugging their 20-day lower bounds. The price-ratio structure shows no signal of independent strength in the China market.
6. Historical Statistics & Seasonality
On seasonal statistics, this section cites only the historical sample of 20 trading days from the same date over the past 13 years: average change -2.39%, median -4.71%, positive years 4/13, a win rate of about 31%, meaning 9 of the past 13 years recorded declines over the same window. The distribution has fat tails: the best year was 2016 at +22.99% and the worst was 2021 at -28.46%, a range exceeding 51 percentage points. This indicates that while the seasonal direction for this window is weak, year-to-year dispersion is extremely high, and an extreme move in a single year can completely overwhelm the average signal. The median of -4.71% is notably lower than the average of -2.39%, indicating that the central tendency of declines in down years is deeper than the central tendency of gains in up years, and the distribution is negatively skewed. Against the current backdrop of I2701 [10-09 settlement] at 683.5 CNY/t and a 20-day decline of 6.06%, the seasonal direction aligns with the existing trend. However, it must be emphasized that the sample is only 13 years, the window is fixed at 20 trading days, and 2016 and 2021 correspond respectively to extreme easing and extreme production-restriction environments. Current macro conditions are not simply comparable to either. Therefore, seasonality serves only as background weight and does not constitute an independent trading basis. If actual price action over the next 20 trading days converges toward the seasonal median of -4.71%, the corresponding level would be around 651. That figure is purely a statistical extrapolation, not a target level, and this section does not place orders based on it.
7. Scenario Analysis
Scenario analysis is as follows, with the three scenario probabilities summing to 100%. Base scenario (probability 60%, direction biased bearish, consistent with the Section 1 conclusion): trigger condition is a daily close sustained below pivot P 683 and R1 687.5, and main-contract open interest does not show a persistent decline, i.e., the open-interest-build-downside pattern described in Section 1 continues; target is 667.5 (678.5 − 1×ATR14), with downside space opening after a break below the 20-day channel lower band at 678.5; corresponding action is to maintain a short bias, using 678 (S1) as the first observation level and 667.5 as the measured target. Bullish scenario (probability 20%): trigger condition is a daily close above 687.5 (R1) and a decline in main-contract open interest, i.e., the invalidation condition given in Section 1 is met, while the top-20 net short of 42,049 lots continues to narrow; target is 711.5 (09-28 high), which is about 24 points from 687.5 and exceeds 0.5×ATR, direction upward; corresponding action is to exit shorts and not initiate longs yet, reassessing after a pullback confirmation. Bearish scenario (probability 20%): trigger condition is a daily close below 678.5 (20-day channel lower band) with 678 (S1) also lost, and international market FEF=F breaking below 90.8 (20-day lower band) to form resonance; target is 667.5, consistent with the base-scenario measured level, but the path is more abrupt; corresponding action is to add to shorts with the trend, strictly using 695 as the stop-loss line. Common constraint across all three scenarios: in any scenario, a daily close holding above 687.5 with open interest declining invalidates the bearish logic; the probability allocation reflects the current price at the 6th percentile of the 20-day channel and the reality of active short-side open interest build, but does not rule out tail risk from macro data surprises (10-14 CPI/PPI, 10-19 fixed-asset investment and property data).
8. Trading Strategy & Risk Management
Trading strategy and risk management: per the established plan, short entry at 684, stop-loss at 695, target at 663, horizon 1-2 weeks, profit/loss ratio 1:1.9. The stop-loss at 695 is set based on risk conversion: stop distance is 11 points, i.e., 1.05×ATR (ATR14 at 10.5), slightly above one average daily true range, sufficient to filter daily noise without being stopped out by normal volatility; at the same time, 695 sits above R1 687.5, so if price closes above 687.5 with open interest declining, the Section 1 invalidation condition is triggered, and the stop-loss and invalidation condition corroborate each other. On position sizing, contract multiplier is 100, per-lot risk is CNY 1,210 (including fees and slippage), and a single-trade risk budget of CNY 66,920 corresponds to a reference cap of 55 lots; actual lots must not exceed this cap and should be scaled down proportionally to the account risk budget. Add/reduce rules: after entry, if price breaks below 678.5 (20-day channel lower band), positions may be added in batches per the established plan, but total lots remain capped at 55; if price rebounds toward 687.5 (R1) with open interest declining, positions should be proactively reduced rather than waiting for the stop; under no circumstances should counter-trend additions be made above 695. The 1-2 week horizon corresponds to the current unfinished weekly candle (from 10-08, tentatively 682.5, -2.85%) and the 10-14 and 10-19 macro data windows; if the target is not reached by expiry and price remains within the 678-687.5 range, positions should be closed and the trade not rolled.
9. This Week's Data Calendar
This week's data calendar (Beijing time): 10-14 09:30, China CPI y/y and PPI y/y, high importance, affecting ferrous metals, nonferrous metals, and chemicals; 10-19 09:30, new home prices m/m (medium); 10-19 10:00, energy production (medium), fixed-asset investment ytd/y (high), household income (medium), industrial capacity utilization (medium), industrial production y/y (high), real estate development investment ytd/y (medium), retail sales y/y (high), services production index y/y (high). Expectations and prior values for the above data have not been released; actual values exceeding expectations by ±threshold are treated as surprises, with fixed-asset investment, industrial production, retail sales, and property investment having the most direct impact on iron ore demand expectations.
This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.