I. Core Conclusion & Directional Bias
This report holds a bullish bias on SHFE Copper (SHFE.CU). The core driving logic is as follows:
First, macro expectations provide support. U.S. CPI and PPI data are expected to beat consensus, which will reinforce dollar and rate expectations. As an industrial metal with strong financial attributes, copper's pricing logic amplifies the volatility of the dollar and rates, thereby boosting copper prices. The copper-to-gold ratio sits at the 99.6th percentile of the past year, signaling copper's relative strength versus gold. This extreme percentile often suggests copper still has upside room under macro expectations.
Second, supply-demand remains in tight balance. Although China's inventory has accumulated slightly, it remains at low levels overall. LME inventory has declined cumulatively by 11,625 tonnes over 20 consecutive reporting periods, while COMEX inventory, despite some volatility, has generally held at low levels. This supply-demand structure provides a solid floor for copper prices; any marginal improvement on the demand side could trigger a rapid price rally.
Third, technicals are strong. Price is trading near the upper band of the 20-day channel, and the night session extended the strength. The current price of 110,990 (night session) is close to the 20-day high of 112,330 and sits just below the pivot R1 (111,090), indicating that bullish momentum is still accumulating. A break above R1 would open further upside space.
Invalidation condition: If the daily close effectively breaks below 110,180 (S1 pivot), the bullish thesis is invalidated, and market sentiment and the supply-demand framework must be reassessed.
II. Price Action & Technical Analysis
As of the 2026-10-13 settlement, SHFE Copper (SHFE.CU) closed at 110,990, with a settlement price of 110,900, up +0.2% vs. the previous settlement. The 5-day gain is +1.3%, and the 20-day gain is +1.44%. The current price sits at the 76.4th percentile of the 20-day channel (106,650–112,330), indicating price is near the upper channel band with strong bullish momentum.
On technical indicators, ATR14 is 1,055 (0.95%, full intraday range) and RV20 is 15.3%, showing that recent volatility has risen. On pivot levels, P = 110,640, R1 = 111,090, and S1 = 110,180. The current night session price of 110,990 (as of 10-14 08:00) sits between P and R1, near the key R1 resistance. If the night session breaks above R1 (111,090), further upside will open; if it breaks below S1 (110,180), price may retrace toward P.
On the weekly chart, the last closed weekly candle (2026-10-08 to 2026-10-09) closed at 110,110, with a weekly change of +0.39%. This week (starting 2026-10-12, 2 trading days so far) is unclosed, temporarily reporting 110,990 (+0.8%), indicating the weekly trend remains upward. However, note that this week has not yet closed, so weekly conclusions can only reference closed weekly data.
From a candlestick perspective, among the last 5 daily candles, the 10-13 close of 110,990 represents a +0.33% gain vs. the prior day's 110,630, showing sustained bullish momentum. The night session opened at 110,950, with a high of 111,020, low of 110,610, and closed at 110,730 — down -0.23% vs. the day session close, but only -0.15% vs. the settlement price. This indicates the night session pullback was limited and bullish support remains strong.
Overall, the technical picture presents a bullish structure. The key resistance R1 (111,090) is the short-term breakout target, while support S1 (110,180) is the defensive line. If price can hold above R1, it will likely challenge the 20-day high of 112,330.
III. Supply-Demand Balance & Fundamental Drivers
The supply-demand fundamentals are the core support for the bullish copper view. On inventory: LME copper warehouse stocks stand at 231,275 tonnes (2026-10-12), with a daily change of -1,750 tonnes (-0.75%) and a cumulative 20-period decline of 11,625 tonnes, showing continuous global destocking. COMEX copper registered inventory is 470,200 short tonnes (2026-10-09), down -5,700 short tonnes (-1.2%) daily; although the absolute level is elevated, the downtrend is clear. SHFE copper warrants stand at 9,407 tonnes (2026-10-13), up +622 tonnes (+7.08%) daily — a slight accumulation, but overall still at low levels.
On the supply-demand structure, copper demand is closely tied to global manufacturing activity. While global manufacturing PMI has not yet recovered significantly, marginal improvement expectations exist. In particular, a U.S. inflation beat could shift Fed policy expectations, affecting global liquidity and supporting copper demand.
On the supply side, copper mine supply is relatively stable, but some mines may face disruptions. For example, the Centinela strike could cut November copper output by half, delivering a short-term supply shock. Meanwhile, Magna Mining has approved the restart of the Levack mine, targeting commercial production by 2028, indicating limited long-term supply expansion.
On processing margins, copper concentrate TC/RC is not directly quoted, but inventory destocking and supply disruptions jointly support copper prices. On the basis, SHFE copper vs. LME copper premium is +0.84% (2026-10-13), showing Chinese copper prices are relatively stronger vs. the international market. The import window tends to open, but overall remains within a reasonable range.
On macro transmission, a U.S. CPI and PPI beat will reinforce dollar and rate expectations, amplifying the volatility of dollar and rates in copper's pricing logic. The copper-to-gold ratio at the 99.6th percentile of the past year signals copper's relative strength versus gold, and this extreme percentile often suggests copper still has upside room under macro expectations.
In summary, the tight supply-demand balance remains unchanged, with macro expectations and supply disruptions jointly supporting a bullish copper view.
IV. Positioning & Fund Flows
Positioning data shows strengthening bullish forces. The top-20 trader data shows total SHFE.CU open interest at 348,556 lots, with a net short of 17,144 lots (daily change +113 lots). Although net shorts persist, the daily increase of 113 lots signals short covering or short reduction. Main nominal positioning is CNY 108.61 billion, with a daily change of +CNY 311 million, open interest +561 lots, change +0.2% — showing build-up on strength, with notably active long-side initiation.
COT data shows that international managed money net positioning fell from 82,522 lots (2026-09-22) to 61,134 lots (2026-10-06), a change of Δ = -16,924 lots, indicating international funds have reduced exposure. However, COT crowding metrics show netPct declining from 27.36% to 20.11% and crowding falling from 69.05 to 61.66, suggesting crowding is easing and market sentiment is becoming more rational.
On implied vs. realized volatility: ^VIX (S&P 500 implied vol) is 15.27 (2026-10-13), at the 16th percentile of the past year, showing market implied volatility is low. ^GVZ (gold implied vol) is 22.48 (2026-10-12), at the 10th percentile, showing gold volatility is extremely low. ^OVX (WTI implied vol) is 48.52 (2026-10-12), at the 41st percentile, showing crude oil volatility is moderate. Copper's implied volatility is not directly quoted, but RV20 at 15.3% shows realized volatility has risen.
Positioning shows that although net shorts persist, long-side initiation is notably active and short covering signs are emerging. COT crowding is declining and market sentiment is becoming more rational. The implied vs. realized volatility comparison shows market implied volatility is low while realized volatility has risen, suggesting the market is pricing in future uncertainty.
In summary, positioning shows strengthening bullish forces, and fund flows support a bullish copper view.
V. Cross-Asset Relative Value & China vs. International Markets
Cross-asset relative value highlights copper's relative strength. The Copper/Gold ratio stands at 1.61 (2026-10-13), at the 99.6th percentile over 1 year and the 61.64th percentile over 3 years. This extreme percentile signals copper's pronounced outperformance versus gold, often implying further upside for copper prices driven by macro expectations. The Gold/Silver ratio is at 70.18 (2026-10-13), at the 82.54th percentile over 1 year and the 27.51st percentile over 3 years, indicating silver's relative weakness versus gold; however, the extreme percentile of the Copper/Gold ratio warrants greater attention.
The Oil/Gold ratio is at 0.0225 (2026-10-13), at the 95.24th percentile over 1 year and the 50.53rd percentile over 3 years, reflecting crude oil's relative weakness versus gold. The Crack Spread (3:2:1) is at USD 65.94/barrel (2026-10-13), indicating acceptable refining margins.
Regarding onshore-offshore spreads, SHFE.CU versus LME.CU shows a premium of +0.84% (2026-10-13), compared with +0.28% five days prior. This indicates Chinese copper prices are relatively stronger than international benchmarks, with import windows tending to open. Note that this premium excludes freight and premiums/discounts and serves only as a proxy for import profitability.
On the dollar and rates front, the DXY Dollar Index stands at 102.22 (2026-10-13), and the 10Y US Treasury yield is at 5.217% (2026-10-13). A stronger dollar and rising rates provide support for copper prices; as an industrial metal with strong financial attributes, copper's pricing logic amplifies the volatility of dollar and rate fluctuations.
In summary, cross-asset relative value highlights copper's relative strength, and the international-onshore premium supports a bullish bias on Chinese copper prices. The extreme percentile of the Copper/Gold ratio is an important signal, indicating that copper prices retain upside potential under macro expectations.
VI. Historical Statistics & Seasonality
Based on historical statistics covering 20 trading days from the same date over the past 15 years, SHFE copper exhibits divergent seasonal characteristics from mid-October to early November. The sample shows an average gain of +0.71% over this period, but a median return of -1.17%, indicating that the magnitude of losses in down years often exceeds the magnitude of gains in up years. The overall win rate is merely 6 out of 15 years, or 40%, recording positive returns. Among the 15 historical samples, the best-performing year was 2016, with a cumulative gain of +24.97%, primarily benefiting from the resonance of global manufacturing recovery expectations and a weakening dollar; the worst-performing year was 2015, with a cumulative decline of -6.38%, mainly driven by the retreat of the commodity super-cycle and China's destocking pressure. Within the current statistical window, although the average gain is positive, the median is negative, warning that relying solely on seasonal factors to go long carries elevated risk and requires adjustment based on prevailing macro and supply-demand fundamentals. Notably, the extreme positive returns in 2016 were often accompanied by global liquidity easing and accelerated infrastructure investment, while the extreme negative returns in 2015 corresponded to global demand contraction. Under current macro expectations, if US inflation data exceeds expectations and reinforces dollar and rate expectations, it may replicate the macro-driven logic of 2016, thereby raising the probability of a seasonal rally. However, if inventory destocking falls short of expectations or supply-side disruptions ease, a seasonal pullback resembling 2015 may recur. Therefore, seasonal statistics serve only as background reference; the core driver must still rely on current data and price action.
VII. Scenario Analysis
Based on the current bullish conclusion and invalidation conditions, we construct three scenarios—base, bullish, and bearish—with the following probability allocations and trigger logic:
Base Case (50% probability): Prices maintain a volatile uptrend, with the core logic being tight supply-demand balance and macro expectation support. The trigger condition is prices holding above S1 (110,180) without an effective breakdown. Target prices are R1 (111,090) and the 20-day high of 112,330. A breakout above R1 will open further upside space, with targets moving up to 112,500. Operationally, maintain long positions; if prices retest P (110,640) without breaking, continue holding; if R1 is breached, add to positions. The invalidation condition is a daily close effectively below 110,180 (S1 pivot), at which point market sentiment and the supply-demand landscape must be reassessed.
Bullish Case (30% probability): Prices accelerate upward, with the core logic being intensified supply-side disruptions and reinforced macro expectations. The trigger condition is an effective breakout above R1 (111,090) accompanied by a significant increase in open interest. Target prices are 112,500 and the 20-day high of 112,330. A breakout above 112,330 will further open upside space, with targets moving up to 113,000. Operationally, add to positions after breaking R1, with the stop-loss moved up to 111,035 (1×ATR). If prices fall below 111,035, exit the position. The invalidation condition is a daily close effectively below 110,180 (S1 pivot), at which point market sentiment and the supply-demand landscape must be reassessed.
Bearish Case (20% probability): Prices pull back downward, with the core logic being inventory accumulation exceeding expectations and macro expectations failing to materialize. The trigger condition is an effective breakdown below S1 (110,180) accompanied by a decrease in open interest. Target prices are P (110,640) and the 20-day low of 106,650. A breakdown below 110,640 will further open downside space, with targets moving down to 106,650. Operationally, reduce or close positions after breaking S1; if prices rebound below S1, attempt to go short. The invalidation condition is a daily close effectively below 110,180 (S1 pivot), at which point market sentiment and the supply-demand landscape must be reassessed.
In summary, the base case carries the highest probability, followed by the bullish case, with the bearish case carrying the lowest probability. Investors should dynamically adjust strategies based on price action and trigger conditions, strictly adhering to invalidation conditions.
VIII. Trading Strategies & Risk Management
Based on the established strategy, we provide two long-entry plans, both setting stop-loss distances at 1×ATR (ATR14 = 1,055) to ensure controlled risk.
Plan 1: Entry at 110,990, stop-loss at 109,935, target at 112,500, horizon 1–2 weeks, risk-reward ratio 1:1.4. The stop-loss distance of 1,055 equals 1×ATR (ATR14 = 1,055). With a contract multiplier of 5, the risk per lot is 5,385 CNY (including fees and slippage); a single-trade risk budget of 66,928 CNY corresponds to a reference maximum of 12 lots.
Plan 2: Entry at 111,090, stop-loss at 110,035, target at 112,600, horizon 1–2 weeks, risk-reward ratio 1:1.4. The stop-loss distance of 1,055 equals 1×ATR (ATR14 = 1,055). With a contract multiplier of 5, the risk per lot is 5,385 CNY (including fees and slippage); a single-trade risk budget of 66,928 CNY corresponds to a reference maximum of 12 lots.
Stop-loss placement logic: In Plan 1, the stop-loss at 109,935 sits below S1 (110,180), approximately 245 points away, ensuring timely exit if key support is breached to avoid larger losses. In Plan 2, the stop-loss at 110,035 also sits below S1, approximately 145 points away, ensuring timely exit if key support is breached. Both plans use a stop-loss distance of 1×ATR.
Position sizing: A single-trade risk budget of 66,928 CNY corresponds to a reference maximum of 12 lots, ensuring controlled risk per trade. If prices break above R1 (111,090), positions may be added, but total exposure must not exceed the cap. If prices fall below S1 (110,180), reduce or close positions to avoid larger losses.
Scaling rules: Add to positions in Plan 1 when prices hold above 110,990; add in Plan 2 when prices break above 111,090. If prices fall below S1 (110,180), reduce or close positions. If prices break above 112,500, take partial profits while retaining a core position. If prices fall below 110,035, stop out entirely.
In summary, trading strategies and risk management strictly adhere to the established framework, ensuring controlled risk and attainable returns.
9. This Week's Data Calendar
October 14 (Beijing Time): 09:30 CPI y/y (expected 1.0%, prior 0.8%), PPI y/y (expected 4.4%, prior 3.8%); 10:03 Trade Balance (expected CNY 790B, prior CNY 809B); 10:04 USD-Denominated Trade Balance (expected USD 116.8B, prior USD 119.1B); 16:03 M2 Money Supply y/y (expected 7.4%, prior 7.5%), New Loans (expected CNY 1,025B, prior CNY 60B); 20:30 Core CPI m/m (expected 0.2%, prior 0.3%), Core CPI y/y (expected 2.5%, prior 2.4%), CPI m/m (expected 0.6%, prior 0.4%), CPI y/y (expected 3.6%, prior 3.4%).
October 15 (Beijing Time): 20:30 Core PPI m/m (expected 0.3%, prior 0.2%), Core Retail Sales m/m (expected 0.6%, prior 1.4%), PPI m/m (expected 0.6%, prior 0.4%), Retail Sales m/m (expected 0.3%, prior 1.2%).
October 16 (Beijing Time): 11:30 Fed Chairman Warsh Speaks.
October 19 (Beijing Time): 09:30 New Home Prices m/m; 10:00 Energy Production, Fixed Asset Investment ytd/y.
This report is generated automatically from public quantitative and macro data for research and market tracking only. It does not constitute any investment advice.