I. Bottom Line & Directional Bias
Mildly bullish. SHFE Copper CU2611 [10-12 settlement] CNY 110,770/t, +0.93%; 5-day +1.09%, 20-day +1.7%, positioned at the 70.1st percentile of the 20-day channel of 106,650–112,330, with the settlement price above pivot P of 110,640. Three core reasons: first, tight inventory structure — LME warehouse stocks [10-09] drew down 2,200 tonnes to 233,025 tonnes, with a cumulative -1,450 tonnes over the last 20 readings, and SHFE warrants [10-12] at only 8,785 tonnes, an extremely low absolute level; second, fund flows show active long positioning — main contract open interest of 195,149 lots, up 3,109 lots on the day, with main contract notional open interest of CNY 107.95bn, up CNY 1.72bn on the day; rising prices accompanied by rising open interest indicate active buying rather than short covering; third, the copper/gold ratio of 1.61 sits at the 99.6th percentile over 1 year and the 61.51st percentile over 3 years, implying strong pricing of growth expectations. Invalidation conditions: a daily close below S1 at CNY 110,180/t, combined with LME stocks turning to consecutive builds and a rapid rebound in SHFE warrants, would invalidate the bullish thesis.
II. Price Action & Technicals
SHFE Copper CU2611 [10-12 settlement] CNY 110,770/t, +0.93%; [10-12 close] CNY 110,630/t. 5-day +1.09%, 20-day +1.7%; ATR14 at CNY 1,076.43/t (0.97%), RV20 at 15.4%, with mild intraday volatility. The 20-day channel spans 106,650–112,330; the current position is 70.1%, with the upper band of 112,330 marking the 20-day high and the lower band of 106,650 the 20-day low. Pivot P is 110,640, R1 is 111,090, S1 is 110,180; the settlement price of 110,770 sits about CNY 130 above P, roughly CNY 320 below R1 — less than 0.5×ATR (CNY 538) — so R1 does not yet constitute a valid trading target; it is about CNY 590 above S1, roughly 0.55×ATR, making S1 the key support. The last completed weekly candle (2026-10-08 to 10-09) opened at 109,740, high 111,390, low 108,770, closed at 110,110, a weekly change of +0.39%; this week, starting from 10-12, has only one trading session and is not yet closed, currently marked at 110,630 (+0.47%), so no weekly conclusion is drawn. Night session recap (10-12 21:05 to 10-13 01:00): open 111,270, high 111,330, low 110,820, close 110,870, +0.22% versus the day session close and +0.09% versus settlement; the night session center of gravity moved higher but did not break the day session high of 111,100. Internationally, HG=F [10-12 settlement] USD 6.747/lb, +0.82%, 5-day +1.6%, 20-day +5.35%, 20-day channel 6.3445–6.9285, position 68.9%; Asian early session 10-13 07:00 at 6.7586 (+0.17% vs settlement), with international and China markets moving in the same direction.
III. Supply-Demand Balance & Fundamental Drivers
Inventory side: LME warehouse stocks [10-09] at 233,025 tonnes, daily change -2,200 tonnes (-0.94%), cumulative -1,450 tonnes over the last 20 readings — a mild but persistent drawdown pace. COMEX registered warrants [10-08] at 475,900 short tons, daily change +4,500 short tons (+0.95%), a modest build in international registered stocks. SHFE warrants [10-12] at 8,785 tonnes, daily change +500 tonnes (+6.04%), prior reading [10-09] at 8,285 tonnes and [10-08] at 7,686 tonnes; Chinese warrant volumes remain at low absolute levels, supporting near-month prices. The supply-demand balance sheet (WASDE, ICSG) is not connected and is not cited. Macro transmission: the US 10-year Treasury yield [10-12] at 5.24%, daily change -0.08%; the dollar index DXY [10-12] at 102.57, daily change +0.35%; a firmer dollar weighs on USD-denominated copper, though the pullback in Treasury yields provides a partial offset. Over the coming week, China M2, new loans, CPI and PPI, as well as US core CPI and retail sales, are due in a dense release window; if Chinese credit and inflation data beat expectations, demand expectations for nonferrous metals will be reinforced. At the industry level, SMM reported that after copper prices retreated from highs, secondary copper rod producers bought on dips (2026-10-12), indicating restocking willingness downstream on price pullbacks and providing marginal price support.
IV. Positioning & Fund Flows
Top 20 seats [10-12]: total open interest 356,547 lots, net short 16,320 lots, daily change -1,583 lots; longs 372,867 lots (daily change -2,713), with the net directional stance of shorts being net short. The net short scale narrowed by 1,583 lots versus the prior day, corroborating the price rise with signs of active short cutting, though the net short pattern is unchanged — watch for pressure from shorts re-building positions. COT international comparison: managed money net position [10-06] at 61,134 lots, weekly change -16,924 lots; [09-29] at 78,058 lots (weekly change -4,464); [09-22] at 82,522 lots (weekly change +17,416); [09-15] at 65,106 lots (weekly change -17,048). Over the past four weeks, managed money net positions have fallen from the 82,522-lot high to 61,134 lots, a cumulative cut of about 21k lots, while prices have remained resiliently strong — a temporary divergence between positioning and price, reflecting long profit-taking rather than a trend exit. On crowding, [10-06] netPct at 20.11%, crowding percentile 61.66, CTA at 98; CTA trend-following positions are in an extreme range, and the crowding percentile of 61.66 sits in a neutral-to-high zone, not reaching the |z|>1.5 extreme threshold. Implied versus realized volatility: RV20 at 15.4%, HG=F international RV20 at 17.5%, ATR14 at 0.122 (1.81%); the options market shows no obvious volatility premium for copper, with event risk priced relatively mildly.
V. Cross-Asset Relative Value & Onshore-Offshore Value
International vs China comparison: SHFE.CU versus LME.CU, China tax-adjusted premium +0.06% [10-12], versus -0.31% five days earlier; the premium has turned from negative to positive, suggesting the import window is inclined to open, but the margin is minimal, excluding freight and premiums/discounts, and serves only as an import P&L proxy. Cross-asset snapshot [10-12]: copper/gold ratio 1.61, 1-year percentile 99.6%, 3-year percentile 61.51% — copper is at a one-year extreme high versus gold, with growth expectations fully priced, but this also means relative valuation is no longer cheap; gold/silver ratio 69.25, 1-year percentile 77.38%, 3-year percentile 25.79%, with silver relatively weak versus gold; oil/gold ratio 0.0224, 1-year percentile 95.24%, 3-year percentile 50%. DXY at 102.58, 10-year Treasury yield 5.24%, VIX at 15.21, 1-year percentile 16%, with macro risk appetite stable. Term structure: international market in CONTANGO, M1-M2 at -0.0305 (-0.46%), RY at -5.47%, slope at 0.0346; the near-month discount structure offers limited support to SHFE copper near-month contracts. Risk metrics: DD52w at 13.49%, DD20d at 4.36%, Sharpe30 at 0.5194, VaR95 at -2.97%; the one-year maximum drawdown is about 13.5%, with moderate risk-adjusted returns.
VI. Supply Chain & Seasonal Inventory
Seasonal statistics (past 15 years, same date, 20 trading sessions): average +0.74%, median +0.32%, up in 8 of 15 years, win rate about 53.3%; best 2016 at +16.69%, worst 2015 at -5.48%. The sample is limited and serves as background only, not as a directional basis. In distribution terms, the median magnitude of positive years is asymmetric against the tail risk of negative years: the 2015 single-segment drawdown of -5.48%, scaled by the current 20-day channel width of 106,650–112,330, warns that seasonality is not one-sided protection. Cross-market comparison: international HG=F 20-day +5.35%, 5-day +1.6%, directionally aligned with SHFE copper's 20-day +1.7% but with a steeper international slope, with the seasonal premium more evident internationally. Currently CU2611 [10-12 settlement] CNY 110,770/t, at the 70.1st percentile of the 20-day channel; extrapolating the median +0.32% implies a 20-trading-session target of about CNY 111,124/t, highly coincident with pivot R1 at CNY 111,090/t, indicating that R1 is both technical resistance and the upper bound of the seasonal center. Overall, seasonality provides weak support for the bullish bias (win rate above half, positive median return), but is insufficient to drive positioning on its own and requires confirmation in resonance with inventory drawdowns (LME [10-09] 233,025 tonnes, daily change -2,200 tonnes) and active long additions (main contract open interest 195,149 lots, daily increase 3,109 lots).
VII. Scenario Analysis
Base case (probability 55%, bullish bias): Trigger condition is a daily close holding above pivot S1 at CNY 110,180/t, with LME inventories continuing to draw (the pace of a cumulative -1,450 tonnes over the last 20 sessions not reversed) and SHFE warrants remaining at a low below 10,000 tonnes; target level R1 at CNY 111,090/t, with a break above opening the 20-day channel upper band at CNY 112,330/t; operationally, focus on scaling into longs on pullbacks in CU2611, with the settlement price of CNY 110,770/t above pivot P at CNY 110,640/t, and the positioning structure (top-20 seats net short 16,320 lots, daily -1,583 lots) showing active short covering, which together with open interest build on the rally argues for holding rather than chasing. Bullish case (probability 25%): Trigger condition is a daily close firmly above R1 at CNY 111,090/t, with the night session center of gravity continuing to rise (10-12 night session closed at CNY 110,870/t, +0.09% versus settlement), while LME inventories draw by more than 2,200 tonnes in a single day and SHFE warrants fall below 8,000 tonnes; target level the 20-day high at CNY 112,330/t, with a break above opening CNY 112,780/t (corresponding to the established strategy target); operationally, add on a break of R1 provided the retest holds above CNY 111,090/t, with the stop-loss unchanged at CNY 109,103.57/t. Bearish case (probability 20%): Trigger condition is a daily close below S1 at CNY 110,180/t, with LME inventories shifting from draws to consecutive builds and SHFE warrants rebounding quickly ([10-12] already rose 500 tonnes day-on-day to 8,785 tonnes, requiring observation of whether this persists); target level the 20-day low at CNY 106,650/t, with a break below opening CNY 108,770/t (the prior weekly close low); operationally, close longs and stand aside, without flipping to shorts, as the copper-gold ratio of 1.61 sits at the 99.6th percentile over 1 year and CTA crowding at 98 is in the extreme zone, so a trend reversal requires confirmation from positioning. The three scenario probabilities sum to 100%, the base case is directionally consistent with the bullish bias, and the invalidation conditions are aligned with the rest of the report.
VIII. Trading Strategies & Risk Management
Established strategy (verbatim): Long, entry CNY 110,630/t, stop-loss CNY 109,103.57/t, target CNY 112,780/t, horizon 1-2 weeks, risk-reward 1:1.4; Long, entry CNY 110,180/t, stop-loss CNY 109,103.57/t, target CNY 112,256/t, horizon 1-5 days, risk-reward 1:1.9. Basis for the stop-loss at CNY 109,103.57/t: relative to the CNY 110,630/t entry, the stop distance is CNY 1,526.43/t, i.e. 1.42× ATR (ATR14 is CNY 1076.43/t), covering roughly 1.4 times the average daily full range, which filters routine volatility without being triggered by noise; relative to the CNY 110,180/t entry, the stop distance is CNY 1,076.43/t, i.e. 1× ATR, exactly one ATR width, forming a double confirmation with the S1 pivot at CNY 110,180/t — a daily close below S1 triggers the bullish invalidation condition, with the stop-loss and invalidation condition at the same level, which is logically self-consistent. Position sizing rules: on a risk-converted basis, at the CNY 110,630/t entry the risk per lot is CNY 7,742 (including fees and slippage, contract multiplier 5), and a single-trade risk budget of CNY 66,941 corresponds to a reference cap of 8 lots; at the CNY 110,180/t entry the risk per lot is CNY 5,492, corresponding to a reference cap of 12 lots. Add/trim rules: in the base case, build the core position at the CNY 110,630/t entry (no more than 8 lots); if price retests S1 at CNY 110,180/t without breaking it and LME inventories do not turn to builds, add at the second tranche of CNY 110,180/t (total no more than 12 lots); if the daily close falls below CNY 110,180/t or LME inventories build consecutively and SHFE warrants rebound quickly, immediately execute the stop-loss at CNY 109,103.57/t and halt further additions. Target achievement: scale out of longs in tranches once the CNY 110,630/t entry reaches CNY 112,780/t or the CNY 110,180/t entry reaches CNY 112,256/t; if the horizon expires without the target being hit, close the position and stand aside.
IX. This Week's Data Calendar
This week's data calendar (Beijing time): 10-13 16:03 China M2 y/y (forecast 7.4%, prior 7.5%), new loans (forecast 1025B, prior 60B); 10-14 09:30 China CPI y/y (forecast 1.0%, prior 0.8%), PPI y/y (forecast 4.4%, prior 3.8%), 10:03 trade balance (forecast 790B, prior 809B), 10:04 dollar-denominated trade balance (forecast 116.8B, prior 119.1B); 10-14 20:30 US core CPI m/m (forecast 0.2%, prior 0.3%), y/y (forecast 2.5%, prior 2.4%), CPI m/m (forecast 0.6%, prior 0.4%), y/y (forecast 3.6%, prior 3.4%); 10-15 20:30 US core PPI m/m (forecast 0.3%, prior 0.2%), core retail sales m/m (forecast 0.6%, prior 1.4%), PPI m/m (forecast 0.6%, prior 0.4%), retail sales m/m (forecast 0.3%, prior 1.2%); 10-16 11:30 Fed Chair Warsh speaks; 10-19 09:30 new home prices m/m, 10:00 energy production, fixed asset investment y/y YTD.
This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.