1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The natural rubber price is expected to oscillate, and investors are advised to focus on low - buying opportunities. The ru2605 contract has limited downside space and is supported at the price of 16,200. In the long - and medium - term, the price center is expected to move up slightly under the background of strong supply - demand, but the overall increase is relatively limited [3][6]. - Different market participants are given corresponding trading strategies. For example, investors can sell call options for covered strategies and buy put options to hedge against downside risks; traders and end - customers can take different actions according to their inventory and procurement situations [3]. - Key data to be monitored include domestic rubber import data, domestic natural rubber inventory changes, tapping conditions and raw material prices in major domestic and foreign producing areas, macro - policy changes, and related rubber price performances [3]. 3. Summary by Related Catalogs 3.1 RU Industry Structure - Capacity Structure: The upstream raw materials of natural rubber come from rubber trees. The main producing areas are in Southeast Asia, Africa, and in China, Yunnan and Hainan. In 2002, the main supplying countries were Thailand, Indonesia, Vietnam, and Cote d'Ivoire [10]. - Demand Structure: The downstream demand is mainly for tires, accounting for about 80%, and commercial vehicle demand has a relatively large proportion [10]. 3.2 Market Review - In March, the natural rubber price oscillated. Affected by geopolitical factors, Middle East orders decreased, but the strong synthetic rubber price led to substitution demand, resulting in a basic balance of demand [13]. 3.3 Price Changes - Spread: The main RU contracts are 1, 5, and 9 contracts, with the current main contract being RU2605. The RU5 - 9 inter - monthly structure has changed to contango [18]. - Basis: The delivery products of the RU futures contract are ISS3 and SCR WF. Since RSS3 has better quality than SCR WF, there is a premium. In actual delivery, it is basically SCR TF. The full - latex basis of SCR TF and the non - standard basis of mixed rubber are the focuses. The full - latex basis has been stable this month, currently around 05 - 250 to 300 yuan/ton [18]. - Foreign Futures Prices: The report shows the price trends of Singapore rubber TSR20 (FOB) and Tokyo rubber RSS3 [45][47]. - Cross - Variety Spreads: The spread between full - latex and Vietnamese 3L is worthy of attention because they can be completely substituted in downstream use [50]. 3.4 Supply - Main Producing Areas Supply: The global natural rubber production is mainly concentrated in Southeast Asia. According to the ANRPG report in January 2026, global natural rubber production increased by 4.3% to 1.409 million tons in January, and consumption increased by 4.4% to 1.287 million tons. In 2026, global production is expected to increase by 2.2% to 15.324 million tons, and consumption is expected to increase by 1.4% to 15.602 million tons [54]. - China's Import Situation: In February 2026, China's natural rubber import volume was 461,500 tons, a month - on - month decrease of 28.46% and a year - on - year decrease of 8.29%. The cumulative import volume from January to February was 1.1065 million tons, a cumulative year - on - year increase of 1.36% [60]. - Specific Producing Areas: In February 2026, Thailand's natural rubber exports to the world were 415,000 tons, and exports to China were 268,600 tons. Vietnam's natural rubber exports in February were 76,200 tons, and imports were 115,900 tons. Hainan has not started tapping, while in Yunnan, the weather is generally good, with fresh glue gradually increasing in output, and the glue purchase price is between 14.3 - 14.8 yuan/kg [74][76][79]. 3.5 Demand - Tire Industry Start - up: At the end of the month, the capacity utilization rate of China's semi - steel tire sample enterprises was 79.37%, and that of full - steel tire sample enterprises was 72.24%. It is expected that the capacity utilization rate of sample enterprises will slightly decline in the next cycle [87]. - Tire Inventory: The inventory situation of tire production enterprises is important for understanding the start - up rate and terminal demand [91]. - Supporting Market: The supporting market is mainly used for the tires of newly - produced passenger and commercial vehicles. The report shows relevant data on automobile production and sales [96]. - Replacement Market: The report shows data on highway freight turnover, China's logistics industry prosperity index, and highway logistics freight rate index, which are related to the replacement demand for tires [105]. - Export Market: The report shows the export volume data of semi - steel tires, full - steel tires, and new pneumatic rubber tires [117]. 3.6 Inventory - As of March 22, 2026, China's natural rubber social inventory was 1.36 million tons, a month - on - month decrease of 4,000 tons, a decrease of 0.3%. The total inventory of dark - colored rubber was 921,000 tons, an increase of 0.1%, and the total inventory of light - colored rubber was 439,000 tons, a month - on - month decrease of 1% [120][121].

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report - The liquefied petroleum gas (LPG) is in an upward - fluctuating stage, and the price center is expected to rise in the later stage. The logic is that with the intensification of the geopolitical conflict between Iran and the United States, Iran has blocked the Strait of Hormuz. Currently, the shipments from the Middle East have almost stopped. If the Strait of Hormuz remains blocked, the supply of imports from the Middle East will face significant challenges, leading to an increase in the global spot price. Additionally, with the attacks on relevant oil and gas production facilities such as the new oil fields in South Vietnam and Ras Tanura, the long - term reduction in Middle East supply will keep the propane supply - demand in North Asia in a tight pattern [3]. 3. Summary According to Related Catalogs 3.1 Core Views and Strategies - **Contract and View**: The contract is pg2605. The view is that LPG is in an upward - fluctuating stage, and the price center is expected to rise later [3]. - **Strategy Recommendations**: - **Upstream Refineries**: With relatively high inventory and concerns about LPG price drops, refineries are advised to buy put options on PG2605 with an exercise price of 6000 [5]. - **Import Traders**: With relatively high inventory and concerns about LPG price drops, they are advised to buy put options on PG2605 with an exercise price of 6000 [5]. - **Downstream Third - level Stations**: To prevent a significant price increase and rising procurement costs, they are advised to buy the PG2605 contract at the market price for hedging [5]. 3.2 Weekly Important Price Changes and News - **Price Changes**: - **Futures Prices**: The prices of futures contracts such as PG2605, PG2606, etc. showed varying degrees of increase compared to the previous period. For example, the price of PG2605 on March 19, 2026, was 6283.00 yuan/ton, an increase of 613 yuan/ton compared to the previous day and 681 yuan/ton compared to the previous week [10]. - **Spot Prices**: The prices of various spot products also changed. For example, the price of imported gas in Guangzhou increased by 80 yuan/ton compared to the previous day and the previous week [10]. - **News**: - Iran's South Pars energy facilities were attacked by Israel, and Iran counter - attacked the oil and natural gas facilities of neighboring countries. - Saudi Aramco has cancelled the LR6 supply for April. The production at Juaymah is not expected to resume before mid - April. - Aramco is expected to announce the April CP at the end of March, and the first - round recommendation is expected on March 25. - The loading terminal in Qatar was attacked, and the supply of shipped goods in the Middle East is expected to be interrupted for a long time. A US supplier declared force majeure, increasing concerns about the supply in the Far East [12]. 3.3 Domestic Market - **Domestic Device Maintenance Plan**: Multiple refineries and chemical plants in China are in the process of maintenance, including catalytic units, whole - plant maintenance, etc. For example, Dalian Petrochemical is in the process of whole - plant maintenance, with an expected loss of 1800 tons per day [21]. - **Weekly Marginal Supply - Demand Balance**: - **Supply**: From March 6 - 12 to March 13 - 19, the domestic supply decreased slightly from 55.15 tons to 53.67 tons, and the import volume increased from 60.9 tons to 64.6 tons. The total supply increased from 116.1 tons to 118.3 tons [24]. - **Demand**: The demand from MTBE, alkylation, and PDH also changed slightly. For example, the demand from MTBE increased from 21.8 tons to 22.0 tons [24]. - **Downstream Chemical Profit and Device Operation**: - **Device Operation Rate**: The operating rate of PDH decreased, while the operating rates of alkylation and MTBE in some regions increased. For example, the national average operating rate of MTBE external - sales manufacturers increased by 0.57 percentage points to 69.51% [41]. - **Profit**: The profits of different downstream industries also showed different trends. For example, the profit of traditional MTBE devices and alkylation oil changed compared to the previous period [35][39]. 3.4 US Market - **North American Propane and Propylene Supply**: In the week of March 13, 2026, the production of propane/propylene was 2924 thousand barrels per day, the import was 119 thousand barrels per day, and the export was 1879 thousand barrels per day. Compared with the previous week, the production increased by 62 thousand barrels per day, the import decreased by 17 thousand barrels per day, and the export decreased by 156 thousand barrels per day [101]. - **North American Chemical and Combustion Demand**: The demand in different sectors such as the industrial sector and the residential and commercial sectors also changed. For example, the consumption of propane and propylene in the industrial sector was 473 thousand barrels per day in the week of March 13, 2026 [101]. 3.5 Arbitrage Spreads and Weekly Import - Export Data Statistics - **Arbitrage Spreads**: - The propane arbitrage spreads from the US to the Far East and Northwest Europe showed different trends. For example, the propane arbitrage spread from the US to the Far East on March 20, 2026, was at a certain level [125]. - The propane spreads between Europe and the US, and between the Far East and the US also changed [126]. - **Import - Export Data**: - The imports and exports of propane/propylene in the US also changed. For example, the import and export volumes of propane/propylene in the week of March 13, 2026, were at certain levels [128]. 3.6 North American Region Inventory - **Propane/Propylene Inventory**: The propane/propylene inventory in North America was 72485 thousand barrels in the week of March 13, 2026, an increase of 810 thousand barrels compared to the previous week [101]. - **NGPLs/LRGs Inventory**: The inventory of NGPLs/LRGs also showed a certain trend [154]. 3.7 Asian Market - **Swap Prices and Inter - variety Spreads**: - The prices of various swaps such as Saudi CP propane swap, FEI swap, etc. changed. For example, the price of Saudi CP propane swap on March 20, 2026, was at a certain level [195]. - The spreads between different varieties such as FEI - CP, FEI04 - FEI05, etc. also changed [196][198]. - **Middle East Weekly Shipment Tracking**: - The shipments from the Middle East to different regions such as China, India, and Indonesia showed different trends. For example, the shipments from the Middle East to China in the week of April 20, 2026, were at a certain level [223]. 3.8 European Market - **Swap and Inter - variety Spreads**: - The price of European propane CIF swap and the propane inter - month spread showed different trends. For example, the price of European propane CIF swap on March 20, 2026, was at a certain level [256]. - **LPG Inventory in Europe**: - The LPG inventories in different regions of Europe such as Northwest Europe, Sweden, and Finland were at certain levels. For example, the LPG inventory in Northwest Europe in November 30, 2025, was 168 thousand tons [259].

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report The report indicates that domestic financial aggregates are growing rapidly, while US inflation remains flat without reflecting the impact of oil price shocks. China's economic policies are more proactive, supporting the rapid growth of financial aggregates. The US inflation and employment data show certain trends, and the Fed's monetary policy decisions also have an impact on the market. Geopolitical conflicts, such as the situation between Israel and Iran, may affect the global oil market and inflation [3][4][5]. 3. Summary by Directory Economic Situation - **2025 GDP**: The GDP in 2025 was 1,401,879 billion yuan, a 5.0% increase from the previous year. The primary industry added value was 934.7 billion yuan, up 3.9%; the secondary industry was 4,996.53 billion yuan, up 4.5%; the tertiary industry was 8,088.79 billion yuan, up 5.4% [24]. - **Industrial Added Value**: In 2025, the industrial added value of large - scale industries increased by 5.9% year - on - year. Mining increased by 5.6%, manufacturing by 6.4%, and the production and supply of electricity, heat, gas, and water by 2.3%. Equipment manufacturing and high - tech manufacturing increased by 9.2% and 9.4% respectively [25]. - **Consumption**: The total retail sales of consumer goods in 2025 was 5,012.02 billion yuan, a 3.7% increase. Urban consumption was 4,329.72 billion yuan, up 3.6%; rural consumption was 682.3 billion yuan, up 3.1%. Commodity retail sales were 4,432.2 billion yuan, up 3.8%; catering revenue was 579.82 billion yuan, up 3.2% [25]. - **Investment**: In 2025, fixed - asset investment (excluding rural households) was 4,851.86 billion yuan, a 3.8% decrease. Infrastructure investment decreased by 2.2%, manufacturing investment increased by 0.6%, and real estate development investment decreased by 17.2%. Newly built commercial housing sales area decreased by 8.7%, and sales volume was 8,020.2 billion yuan [25]. - **Exports and Imports**: In 2026, the export amount and import amount had certain fluctuations. The specific data can be found in the detailed table [16]. - **Unemployment Rate**: In 2026, the urban surveyed unemployment rate and other unemployment - related data showed certain trends [16]. - **PMI**: In February 2026, the manufacturing PMI was 49.0%, a 0.3 - percentage - point decrease from the previous month. High - tech manufacturing PMI was 51.5%, remaining in the expansion range [8]. Financial Situation - **Social Financing Scale**: At the end of February 2026, the stock of social financing scale was 451.4 trillion yuan, a year - on - year increase of 8.2%. The balance of RMB loans issued to the real economy was 274.15 trillion yuan, a year - on - year increase of 6.1%. The incremental social financing scale in the first two months was 9.6 trillion yuan, 316.2 billion yuan more than the same period last year [45]. - **Credit**: At the end of February 2026, the balance of domestic and foreign currency loans was 281.52 trillion yuan, a year - on - year increase of 6%. The balance of RMB loans was 277.52 trillion yuan, a year - on - year increase of 6%. In the first two months, RMB loans increased by 5.61 trillion yuan. Household loans decreased by 194.2 billion yuan, and enterprise loans increased by 5.94 trillion yuan [46]. - **Money Supply**: At the end of February 2026, the balance of broad money (M2) was 349.22 trillion yuan, a year - on - year increase of 9.0%; the balance of narrow money (M1) was 115.93 trillion yuan, a year - on - year increase of 5.9%; the balance of currency in circulation (M0) was 15.14 trillion yuan, a year - on - year increase of 14.1%. The net cash injection in the first two months was 1.05 trillion yuan [45]. Inflation Indicators - **CPI**: In February 2026, the domestic CPI increased by 1.3% year - on - year and 1.0% month - on - month. Core CPI increased by 1.8% year - on - year, indicating the recovery of domestic demand. The increase in CPI was mainly due to the Spring Festival factor and the release of consumer demand [52]. - **PPI**: In February 2026, the PPI decreased by 0.9% year - on - year, with the decline narrowing for three consecutive months. It increased by 0.4% month - on - month, with the increase remaining the same for five consecutive months. The improvement of PPI was due to the rise in international commodity prices and the growth of domestic demand in some industries [53]. Overseas Macro - **US Inflation**: In February 2026, the US CPI increased by 2.4% year - on - year, and the core CPI increased by 2.5% year - on - year, both remaining the same as the previous month. The inflation was affected by the rebound of food and energy prices and the decline of core commodities and services. The market has adjusted the interest - rate cut expectation, and the first interest - rate cut by the Fed may be postponed to September or even December [59]. - **US Employment**: In February 2026, the US non - farm employment decreased by 92,000, far lower than the market expectation of an increase of 55,000. The unemployment rate rose to 4.4%, the highest since December 2025. The employment data was affected by multiple factors such as medical strikes, extreme weather, and statistical model adjustments [59]. - **Fed Policy**: In the FOND meeting on January 29, 2026, the federal funds rate target range was maintained at 3.50% - 3.75%, ending the three - consecutive - month interest - rate cut trend. The statement indicated that the US economy was expanding steadily, employment growth was low but the unemployment rate was stable, and inflation was still slightly higher than the 2% long - term target [59]. Interest Rates and Exchange Rates - **Exchange Rate**: In early March 2026, the RMB - US dollar exchange rate showed a significant "V - shaped reversal" and entered a two - way fluctuation range. The central bank lowered the foreign exchange risk reserve ratio for forward foreign exchange sales from 20% to 0 to release a "stable exchange rate" signal. The RMB - US dollar exchange rate is expected to show a pattern of "two - way fluctuation and a steady increase" [65]. - **Interest Rates**: The report also presents data on various interest rates such as DR007, SHIBOR, LPR, and bond yields in China and the US [66][71].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints - The decline space of urea is limited, with support at the price of 1600. The reasons include: recent inspections of domestic gas - based plants leading to a decline in daily production, but high production and operation rates year - on - year; demand in the off - season with mainly reserve inventory, and an increase in demand for industrial compound fertilizers; a slight increase in cost support around 1500 - 1550; the issuance of the fourth batch of export quotas with an expected quantity of about 600,000 tons. Overall, the downward drive of urea slows down under the adjustment of off - season storage and exports, and it should be treated as a range - bound situation [4]. 3. Summary According to the Directory 3.1 Urea Fundamental Overview - **Cost - end logic**: Coal prices have declined recently, while urea ex - factory prices have slightly increased. Coal - based urea profits are still low, close to the production cost of anthracite - based urea. The natural gas price in the southwest region remains stable, and gas - based urea profits are also low [8]. - **Supply - end logic**: Domestic gas - based plants are gradually under inspection, resulting in a decline in domestic production on a month - on - month basis, but the absolute quantity remains high, and the supply side is generally loose [8]. - **Demand - end logic**: In the agricultural sector, demand is in the traditional off - season with weak support, mainly for reserve replenishment. In the industrial sector, the compound fertilizer industry has a high operating rate, and other industrial demands maintain rigid procurement. After the issuance of the fourth batch of export quotas, speculative demand has weakened. Overall, domestic urea supply remains high with difficult - to - relieve pressure. Although agricultural demand is in the off - season, off - season storage is in an orderly manner, and the compound fertilizer industry maintains a high operating rate. Overall demand has slightly increased. With mid - stream reserve replenishment and exports, urea enterprise inventories have continuously decreased, and the fundamentals support a short - term bottom - rebound of spot prices [8]. 3.2 Price, Spread, and Profit - **Urea price changes**: This week, the urea spot market price has slightly increased, with mainstream regional prices rising by about 10 - 30 yuan/ton on a month - on - month basis. Local environmental warnings have affected the compound fertilizer industry and urea production, and market speculation about exports has stimulated downstream purchasing. Urea factory inventories have decreased, and orders have increased, with a firm price - quoting intention [27]. - **Regional spreads**: This week, regional spreads are within the normal range, which can be used to judge whether the regional logistics window is open [39][40]. - **Urea profits**: Coal - based urea profits remain low, close to the break - even point of anthracite - based production. Gas - based urea profits also remain low. The current ratio of urea to ammonium chloride is at a relatively high level compared to the same period in previous years, while the ratios to phosphate fertilizers and potash fertilizers are at low levels in previous years [63][66]. - **Overseas prices and spreads**: India has issued a new urea import tender, which has led to a rebound in the international urea market. Different regions have different price trends. The 5 - 9 spread of urea has strengthened by 15 yuan/ton this week, and the basis has weakened, for example, the 05 - contract basis in Henan has weakened by 18 yuan/ton compared to last week [78][89]. 3.3 Supply - Production and Operation - **Output and operation rate (Longzhong data)**: Urea daily production and operation rates are presented in the data, showing the operation of domestic urea plants [94]. - **Output and operation rate (Baichuan data)**: This cycle, domestic urea production is 1.3334 million tons, a decrease of 32,500 tons from last week. The operation rate is 78.77%, a decrease of 1.92%. Among them, coal - based urea is 87.06%, and gas - based urea is 50.37% [96]. - **Capacity investment and maintenance**: In 2025, the domestic urea capacity is 79.8 million tons, and it is planned to put into production 5.95 million tons in 2026, with an expected capacity growth rate of about 7.45%. By the end of 2026, the urea capacity is expected to reach 95.75 million tons. This week, the domestic urea plant maintenance loss is 301,700 tons, an increase of 11,800 tons from last week [102][113]. 3.4 Demand - **Agricultural fertilization**: Currently, agricultural demand is in the traditional off - season, mainly for reserve replenishment [8]. - **Compound fertilizers**: This cycle, the compound fertilizer market has partially increased, with an operation rate of 37.75%, a decrease of 1.62% from last week. Inventories have increased by 6,600 tons to 702,000 tons [129]. - **Melamine**: This week, melamine production is 30,200 tons, a decrease of 300 tons from last week. The operation rate is 58.07%, a decrease of 0.48%. The domestic melamine market has shown a narrow - range downward trend, with some fluctuations in production capacity utilization and market sentiment [143]. 3.5 Inventory - **Longzhong data**: This week, urea enterprise inventories are 1.0689 million tons, a decrease of 110,800 tons from last week. Port inventories are 177,000 tons, an increase of 39,000 tons from last week [144]. - **Baichuan data**: This week, enterprise inventories are 1.1128 million tons, a decrease of 94,400 tons from last week. Port inventories are 152,000 tons, an increase of 30,000 tons from last week [150].

Report Industry Investment Rating No relevant information provided. Core Viewpoints - The general allocation idea for the chemical sector is to seek hedging allocation for related varieties and focus on timing opportunities for independent varieties [4]. - For the aromatic hydrocarbon strategy (PX - BZ), it is recommended to be long on PX and short on BZ in 2026 due to the expected improvement in the PX - TA production capacity pattern and the continued production expansion of BZ [4][8]. - For the olefin strategy (PVC - PP), it is recommended to be long on PVC and short on PP in 2026 because PVC is entering the production capacity clearance stage with limited new capacity, while PP is in the capacity expansion period [5][67]. - For the timing strategy, it is recommended to time - long BR in the first half of 2026, supported by the favorable supply pattern of its raw material, butadiene [6][110]. Summary by Related Catalogs Aromatic Hydrocarbon Strategy: PX - BZ - **PX Situation**: - In 2025, there was no new PX production capacity, and in 2026, the main domestic production was only one 2 - million - ton device from Huajin Petrochemical, planned to be put into operation after Q3 [12]. - In 2025, four PTA devices were put into operation with a total new capacity of 1.15 billion tons, and in 2026, there was no new PTA device planned, and some old devices stopped production, resulting in a short - term improvement in PTA production capacity [13]. - In 2025, the new polyester production capacity was about 4.5 million tons with a growth rate of about 5.3%, and in 2026, the planned new production capacity was about 4 million tons with an estimated growth rate of about 4%, mainly including filament, staple fiber, and bottle chips [18]. - From the perspective of the supply - demand balance sheet, if polyester maintains stable growth in 2026, both PX and PTA need to increase their annual average loads on the basis of high - load operation this year to balance the industrial chain, and PX is likely to be the most in - short - supply link [25]. - Currently, PXN is around 300 US dollars per ton, and it is expected to continue to strengthen in 2026. The annual average processing fee of PTA is expected to recover to over 200 yuan per ton, but it is difficult to have a large rebound [28]. - **BZ Situation**: - In 2026, BZ production is relatively evenly distributed throughout the year, with an annual production capacity growth rate of about 6%. From a static perspective, the upstream - downstream relationship is relatively balanced, but the production delay of adipic acid devices in 2025 is expected to continue in 2026 [37]. - The domestic supply of BZ is expected to remain at a high level. In the first 11 months of 2025, the domestic output of petroleum benzene was 20.45 million tons, with a cumulative year - on - year growth rate of 7%. It is expected that there will be few BZ overhauls in Q1 2026, and the overhaul volume in Q2 will be moderate [41]. - The import of BZ is difficult to reduce. North American disproportionation devices restarted in Q4 2024, and the US BZ overhauls decreased year - on - year. South Korean BZ is still highly dependent on the Chinese market, and the import volume is difficult to reduce before H1 2026 [46]. - The downstream demand for BZ is suppressed by low profits, and the terminal consumer demand is under pressure. In December 2025, the total production of air conditioners, refrigerators, and washing machines decreased by 14.1% year - on - year [57][59]. - **Strategy Recommendation**: Long on PX and short on BZ [4][8] Olefin Strategy: V - PP - **PVC Situation**: - In 2026, the new PVC production capacity is limited, with a growth rate of only 0.27%, and the number of long - stopped devices is increasing. There is no definite planned production in 2026, only the 300,000 - ton device of Jiahua in 2025, and a total of 220,000 tons of planned exit capacity [71]. - The expectation of using caustic soda to subsidize PVC production is weakening, especially in the second half of the year. The downstream alumina production is mainly concentrated in the first quarter, so the caustic soda price may be more supported in Q1. After Q2, the supply - demand gap pressure of new production capacity will gradually emerge, and the supply of caustic soda will be in surplus [79]. - The export demand for PVC is expected to continue to be good. In 2026, China's PVC exports to India may reach about 1.6426 million tons, and the total exports to non - Indian countries are expected to be 2.5016 million tons. However, the domestic real - estate demand is weak, which will have a long - term negative impact on PVC demand [88][92][94]. - **PP Situation**: - In 2025, the total new PP production capacity was 4.555 million tons, with a growth rate of 10.21%, and the total production capacity exceeded 49 million tons. In 2026, it is estimated that the new production capacity will exceed 4 million tons, with a growth rate of about 9%, and the total production capacity is expected to exceed 53 million tons [99]. - In 2026, PP demand lacks obvious highlights. The growth rate of terminal plastic product demand is difficult to keep up with the expansion of polyolefin production capacity, and the downstream profit pattern is poor, providing limited support for PP [107]. - **Strategy Recommendation**: Long on PVC and short on PP [5][67] Timing Strategy: Long on BR - **Driving Factor**: The long - BR strategy is mainly driven by the raw material, butadiene. There is no new domestic production plan for butadiene in the first half of 2026, and due to the elimination of ethylene production capacity in South Korea and other countries in 2026, the overseas import supply is expected to shrink, which is expected to support the strengthening of BR [6][110]. - **Risk**: The idle oxidative dehydrogenation capacity (with high production costs) may start production under certain conditions, which will significantly increase the supply pressure of butadiene [110]. - **Strategy Recommendation**: In the first half of 2026, refer to the low price of butadiene in early 2025 and the price at which oxidative dehydrogenation starts to make a profit as the upper and lower boundaries, and time to long the main BR contract [110]

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The report analyzes the economic situations of the United States and China in 2026, including their economic indicators, policies, and investment opportunities. It expects the US economy to show a slowdown but not a stall, with the Fed likely to cut interest rates 2 - 3 times. In China, the economy is expected to be low at the beginning and high at the end of 2026, with policies remaining moderately loose. The report is bullish on equity - related assets in 2026, especially favoring technology - growth stocks and the profit - repair direction of "anti - involution" enterprises [46][102][113]. Summary by Relevant Catalogs United States 1.1. Review of 2025 Economic Indicators and Asset Prices - In 2025, the US economy and assets showed a divergence, with weakening economic data but strong asset performance. This was due to loose policies and the rise of AI, and this background will continue into 2026 [10]. 2.1. Entering the Third Year of the Interest - Rate Cut Cycle - In 2025, there were 3 interest - rate cuts totaling 75bp, and the federal funds rate dropped to the range of [3.50% - 3.75%]. In 2026, attention should be paid to the Fed's independence after the chairman's replacement and the Fed's policy expectations in the third year [12]. 2.2. Loose Policies: Intensified Divergence within the Fed - There are internal differences between local and council members and between hawks and doves in the Fed, as well as external differences between the White House's pressure and the Fed's independence. The divergence was intensified in the December vote pattern, as shown by the dot plot [18]. 2.3. Behind the Divergence: The Failure of Monetary Policy - The dual goals point to interest - rate cuts to improve employment. However, AI has squeezed employment, and more interest - rate cuts may further exacerbate this situation. It is estimated that the Fed will cut interest rates 2 - 3 times in 2026, and the federal funds rate is expected to move towards the neutral rate of 3% [21]. 2.4. More Certain and Effective Fiscal Expansion - The "A Great Beautiful Act" includes tax policies (tax cuts of about 3.9 trillion), expenditure cuts (about 1.9 trillion), increased spending (about 0.35 trillion), and raising the debt ceiling from 36.1 trillion to 41.1 trillion dollars [23]. 3.1. Differentiated Investment in the US Economy, with Concentrated AI Investment - The growth rate of US private investment has shown obvious differentiation. Traditional investment demands such as housing and construction have declined, while intellectual property products and equipment have strengthened. The concentrated investment in the AI direction is the main reason [26]. 3.2. The Growth Rate of AI - Related Investment Is Much Higher Than Others - In equipment investment, information - processing equipment, and in intellectual property investment, software investment have maintained high growth rates. The proportion of relevant investment has reached over 25% [32]. 3.3. Continued Decline in US Employment - Non - farm employment and the unemployment rate have continued to weaken. AI has reduced the demand for labor while increasing productivity, leading to a continuous decline in employment [34]. 3.4. Multi - angle Observation of US Employment, Lay - offs, and Structure - Declining demand, accelerated lay - offs, and long - term unemployment together indicate increasing downward pressure on US employment [36]. 3.5. Impact of Weakening Employment - A decline in employment leads to a decrease in income, which affects household spending. Prices of optional durable goods such as cars and rent may be affected, and core inflation may decline, showing the negative correlation between unemployment and inflation [41]. 3.6. The K - shaped Economic Structure in the US - Low - income families are more likely to be affected [43]. 4.1. Mid - term Elections Are a Major Uncertainty - The mid - term elections in 2026 will go through primary elections, final elections, etc. The US will focus on itself, and Sino - US relations will enter a period of relaxation when Trump visits China in April 2026 [44]. 5.1. The Logic of the US Macroeconomic - The rise of AI has intensified resource imbalance, with concentrated AI investment and weakened non - AI investment. Monetary policy is loose but ineffective, leading to idle liquidity. Fiscal policy is loose, and the "Great Beautiful Act" may have various impacts on the economy, such as affecting inflation, the stock market, and the dollar [46]. Economic Indicators - The US economic hard data shows resilience, while soft data slows down. The overall performance slows down but does not stall. The actual GDP growth rate is expected to be 2% in 2026. Inflation indicators continue to slow down, with the inflation expectation dropping to 2.4%. Employment indicators continue to weaken, and the unemployment rate is expected to rise to 4.8%. The Fed is expected to cut interest rates by 50bp - 75bp to around 3% in 2026 [48]. Asset Outlook - Bonds: The yield of the 10 - year US Treasury bond is expected to decline by about 25bp. - Exchange rate: The US dollar index may continue to weaken. - Stocks: The US technology sector remains favored in the long term, but there may be increased volatility in the first half of the year. - Commodities: Gold has room for upward movement, oil is bearish, and there are more opportunities for non - ferrous metals [49]. China 1.1. Review of 2025 Economic Indicators and Asset Prices - In 2025, China's economic data was significantly differentiated, with stable economic growth but a significant decline in investment. Inflation indicators deviated significantly, with CPI rising and PPI contracting. The background of economic transformation will continue [54]. 2.1. Pressures in the Economic Transformation Period - In 2025, there were still problems such as insufficient effective demand, high pressure on residents' income, and persistent youth employment issues [56]. 2.2. Development Main Line: Economic Shift towards People's Livelihood - Fiscal policy involves debt monetization, central government support for local government debt, and the central bank's support for central government debt. The central bank continues to buy gold to back the RMB. Monetary policy aims to stabilize the M2/GDP ratio, and the bond market may bottom out and rebound. Industrial policy focuses on developing new - quality productivity, normalizing the real - estate market, and promoting the service industry. Income distribution is tilted towards families, and the government focuses on people's livelihood. The real - estate market is expected to bottom out slowly, and the RMB will fluctuate more with a higher center than in 2025 [58]. 2.3. Stability Main Line: Stabilizing the Supply Chain and Positioning as a Safe Asset - Domestically, China will maintain supply - chain stability by building up inventories of upstream raw materials and keeping the proportion of manufacturing in GDP stable. Externally, it will ensure resource inflows and position itself as a safe asset to attract foreign investment [60]. 3.1. The First Year of the 15th Five - Year Plan - The goals of the 15th Five - Year Plan include economic growth, institutional reform, and technological and industrial upgrading. Policies will remain loose and more targeted. Monetary policy has limited room for interest - rate and reserve - requirement ratio cuts, and fiscal policy will be more active, with the deficit rate, special bonds, and special treasury bonds not lower than in 2025 [63]. 3.2. More Precise and Effective Monetary Policy - The direction of monetary policy includes fund - swap facilities, stock - repurchase re - loans, and consumption and housing - loan interest subsidies. The M2/GDP ratio will rise, and there may be one cut each in the reserve - requirement ratio and interest rate in 2026, along with the use of structural tools [65][67]. 3.3. A Lighter Fiscal Burden in 2026 - Under the pressure of debt resolution, the bond issuance of the government sector and the growth rate of infrastructure investment have diverged. More than 60% of platforms have cleared their implicit debts. In 2026, the deficit rate, special bonds, and special treasury bonds will not be lower than in 2025, and special bonds can be used for land reserves and the acquisition of existing commercial housing [70]. 4.1. Investment Was the Main Drag on the Economy in 2025 - Investment growth remained low, and investment was the main factor dragging down the overall demand from January to November 2025 [78]. 4.2. Manufacturing and Infrastructure May Receive Support - The profits of the manufacturing industry improved in 2025, while infrastructure investment stalled [81]. 4.3. The Decline in Investment Is the Pain of Economic Transformation - The traditional investment model relying on real estate, infrastructure, and manufacturing has high inventory, high debt, and low profits. Now, the focus is on improving production efficiency, and investment is shifting towards people's livelihood, consumption, and the service industry, with an emphasis on quality [84]. 4.4. Close Combination of Investment in Objects and Investment in People - The 15th Five - Year Plan emphasizes the close combination of investment in objects and people. The proportion of people's livelihood - related investment should be increased, and the income - distribution system should be improved [86]. 4.5. Income Growth Should Be Higher Than GDP Growth - The growth rate of residents' income has declined, and it is necessary to continuously improve the income level of the resident sector [88]. 4.6. How to Increase Income Levels - Measures include deepening the income - distribution system reform, tax cuts and fee reductions, and increasing property income [94]. 4.7. The Investment Attribute of the Stock Market Is Recovering - By improving the inclusiveness and adaptability of the capital - market system and promoting the coordination of investment and financing functions, the stock market can increase the property income of the resident sector [96]. 4.8. Full Relaxation of Real - Estate Restrictions - The real - estate market is still in a state of "falling prices and volumes" and has not stabilized as expected. Real - estate restriction policies have been fully relaxed, and special - bond funds will support the market [101]. Economic Indicators - In 2026, the economy will be low at the beginning and high at the end. The actual GDP growth rate is expected to be 4.9%. Inflation indicators will rise, with core CPI reaching 1.8% and the decline of PPI narrowing to - 1%. Monetary policy will be moderately loose, with M2 remaining high, and there may be one cut each in interest rates and the reserve - requirement ratio. Fiscal policy will be more active [102]. Asset Outlook - Bonds: The 10 - year Chinese treasury bond is expected to fluctuate in the range of 1.6% - 1.9%. - Exchange rate: The RMB exchange rate will rebound passively, with a center around 7. - Stocks: A - shares are still cost - effective, and attention should be paid to technology - growth and undervalued consumer sectors. - Commodities: There are more opportunities for non - ferrous metals and new - energy products, and attention should be paid to products affected by the "anti - involution" policy [106]. Asset Allocation Bonds - US 10 - year Treasury bond yields are expected to decline by about 25bp, and Chinese 10 - year treasury bonds are expected to fluctuate in the range of 1.6% - 1.9% [111]. Exchange Rates - The US dollar index may continue to weaken, and the RMB exchange rate will rebound passively, with a center around 7 [111]. Stocks - US technology stocks remain favored in the long term, and A - shares are cost - effective, with attention on technology - growth and undervalued consumer sectors [111]. Commodities - Gold has room for upward movement, oil is bearish, and there are more opportunities for non - ferrous metals and new - energy products [111]. Direction and Structure Judgment Direction Judgment - The report is bullish on equity - related assets in 2026, but the increase may be smaller than in 2025. Sino - US relations will be in a period of relaxation, and domestic A - share markets will have sufficient liquidity, but the impact of liquidity will weaken [113]. Structure Judgment - The report is more optimistic about technology - growth stocks and the profit - repair direction of "anti - involution" enterprises. If incremental policies for real estate and consumption are introduced, undervalued sectors may have opportunities for profit and valuation repair [115].

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - Continue to be bullish on equity assets in 2026, maintaining a "slow bull" pattern. However, the narrative of liquidity will weaken marginally, and the expectation of economic rebound remains weak, so the increase in 2026 may be smaller than that in 2025 [3][8] - Structurally, it is more optimistic about the opportunities in technology growth stocks and the profit repair direction of enterprises in the "anti-involution" line. It is more bullish on IM. If incremental policies for real estate and consumption are implemented, low-valued sectors have the dual opportunities of profit and valuation repair, and IF can be allocated [5] 3. Summary According to Relevant Catalogs External Environment - **Sino-US Relations**: Before the US mid-term elections in 2026, Sino-US frictions will continue, but they are more of a means of game, and the probability of a significant increase in tariffs is small. Sino-US relations will be in a period of phased relaxation. Pay attention to the possible visit of Trump to China in April 2026, which may cause significant market fluctuations [5][16] - **US Interest Rate Policy**: The recent rise in the US unemployment rate to 4.6% and the decline in core CPI to 2.6% in November provide a basis for interest rate cuts. It is expected that there will be 2 - 3 interest rate cuts in 2026, with a space of 50 - 75BP [18] - **Global Capital Flow**: With the continuation of the global interest rate cut process, overseas funds' allocation demand is expected to further spill over to emerging markets. Chinese equity assets are cost-effective, and overseas funds are expected to contribute more marginal increments to the domestic market. However, Japan's interest rate hike to 0.75% may disrupt global capital spillover and weaken the capital spillover effect [23] Domestic Judgment - **Policy Orientation**: Fiscal policy remains positive, and monetary policy is moderately loose. The support at the macro level has not increased. The real estate market is in the deep - water area of stability, and policies to expand consumption are expected. The main lines of new quality productivity and anti - involution remain unchanged. Capital market policies aim to enhance internal market stability, with strict supervision as the norm [28][31] - **Economic Situation**: GDP growth rate will remain relatively stable at around 4.9% in 2026. Economic stability depends on the central government's borrowing. Manufacturing investment and infrastructure construction investment are expected to pick up in 2026, while the real estate market is still in a downturn. Domestic consumption improvement has fallen short of expectations, and exports may still drive GDP growth next year [34][35][38] - **Market Liquidity**: The A - share market will maintain sufficient liquidity in 2026. Incremental funds come from retail investors' new accounts, margin trading funds, index ETFs, dividend reinvestment, foreign capital, and long - term funds (insurance funds). However, attention should be paid to the impact of shareholder reductions and net outflows of southbound funds, as well as the IPO progress [52] Structural Judgment - **Industry Growth**: The economic growth engine is shifting, and structural opportunities still exist in 2026. Traditional industries such as real estate, construction, coal, and food and beverage are still under pressure of negative growth, while industries representing cutting - edge technologies such as computer, electronics, and power equipment maintain growth. Non - ferrous metals also benefit from technologies such as AI [62] - **Growth vs. Value Stocks**: The strength of domestic growth stocks and value stocks is highly correlated with the yield of the 10 - year US Treasury bond. It is expected that the US will cut interest rates 2 - 3 times in 2026, and the yield of the US Treasury bond has room to decline further, so growth stocks are expected to remain strong [70] - **Index Allocation**: From an absolute valuation perspective, the valuations of the Shanghai Stock Exchange 50 and CSI 300 are both below 15 times, with allocation value. If incremental policies for real estate and consumption are implemented, low - valued sectors have the dual opportunities of profit and valuation repair, and IF can be allocated. The absolute valuations of the CSI 500, CSI 1000, ChiNext, and STAR 50 have increased significantly, pending verification of profit fundamentals. Among the four major index futures, the CSI 1000 has the highest annualized basis rate, which can provide a safety cushion, and can be allocated when its annualized basis rate is higher than 15% [71][75]

1. Report's Investment Rating No investment rating for the industry is provided in the report. 2. Core Viewpoints - The downside space for urea is limited, with support at the [1600] price level. The reasons include the recent maintenance of domestic gas - based plants leading to a decline in daily production on a month - on - month basis, but high levels of production and operation rates on a year - on - year basis; domestic demand is mainly for off - season storage, and industrial compound fertilizer production is in a transition period with a month - on - month improvement in demand; and cost support has slightly increased. The cost support for urea is around 1500 - 1550. With the issuance of the fourth batch of export quotas, expected to be around 600,000 tons, the specific export volume in the later stage should be monitored. Overall, with off - season storage and export regulation, the downward drive for urea is limited, and it should be treated with a sideways view [3]. - In 2026, the domestic urea market is expected to maintain a pattern of loose supply and demand and continuous inventory accumulation, with the overall supply - demand pressure potentially intensifying. Cost support and export policies will be the key factors of concern. The disk pricing is expected to follow the fundamental logic. The peak agricultural demand season may drive the price to rise periodically, and the price will face pressure to decline after entering the off - season, but the cost of the production process will form a bottom support, and exports will adjust the supply - demand balance through quota regulation. It is recommended to focus on seasonal market trends and grasp the rhythm [9]. 3. Summary by Directory Urea Trend Review - In 2025, the urea price showed a wide - range volatile trend of rising first and then falling. In the first half of the year, the price fluctuated upwards due to domestic spring - plowing demand and export expectations, but the pressure of oversupply on the supply side gradually emerged. In the second half of the year, affected by the off - season of agricultural demand and the realization of export expectations, the price center continued to move down. The market can be divided into several stages: from mid - January, with the approach of the Spring Festival holiday, manufacturers' advance orders started, and spot transactions improved; after the Lantern Festival, spring - plowing demand gradually started, and the inventory of urea enterprises decreased rapidly; from mid - June, due to the geopolitical conflict in the Middle East, the international urea price rose, which had an impact on the domestic market; from mid - August, due to the weakening of domestic demand and environmental protection policies, the urea price accelerated its decline; from mid - October, with the warming of market trading, the reserve demand increased, and the price gradually rose [16][17]. Urea Supply Side New Capacity Situation - Domestic urea capacity has entered a new expansion cycle in recent years. As of now, coal - based production still dominates, accounting for over 70%, with the proportion of anthracite - based plants decreasing to about 20% and bituminous - coal - based plants increasing to about 55% [30][31]. - In 2025, without considering capacity exit, about 5.44 million tons of new capacity were put into production according to the plan, mainly from factory expansions and upgrades. In 2026, the domestic urea industry is still in the production cycle, with an estimated new production plan of 5.95 million tons and a capacity growth rate of over 7% [36][40]. - Globally, the urea capacity is expected to maintain a growth pattern in 2026, but the growth rate will slow down. The global urea capacity is expected to reach 247 million tons, with a year - on - year increase of about 0.78% [46]. Production and Operation - In 2025, domestic urea supply remained high due to high capacity and operation rates. The daily production reached over 1.9 million tons in the first quarter, with a peak exceeding 2 million tons. In the second quarter, the daily production continued to rise, remaining above 2 million tons for a long time. In the third quarter, due to high temperatures and frequent equipment failures and maintenance, the daily production decreased to the 1.8 - 1.9 million tons range, but rebounded in September. In the fourth quarter, affected by equipment maintenance and gas restrictions for enterprises in the northwest and southwest, the domestic supply showed a seasonal decline. The overall production in 2025 is expected to reach about 71 million tons, with a year - on - year increase of nearly 7.9%. In 2026, if no backward capacity exits or policy adjustments occur, the national urea production is expected to reach 74 - 75 million tons, with a year - on - year growth rate of over 5% [60]. Urea Export - In 2025, the cumulative urea export volume from January to October was 4.01 million tons, with a significant year - on - year increase. The total annual quota was about 4.6 million tons, distributed in four batches. The export destinations were relatively scattered, with the Americas being the main destination before August, and the proportion of exports to Southeast Asia increasing significantly after September - October [69]. - In 2025, India had 8 urea import tenders, with a transaction volume of about 9.18 million tons, a significant increase compared to the same period in 2024. It is estimated that India's domestic urea production in 2025 was about 29.8 million tons, a year - on - year decrease of about 3.56%, and the import volume was about 10.2 million tons, a year - on - year increase of about 92.82%. In 2026, assuming normal production in India, it is estimated that India will need to import about 8 million tons of urea to maintain domestic supply - demand balance [70]. - For 2026, the export volume of domestic urea still depends on policy guidance. It is expected that exports will still be concentrated in the third and fourth quarters. If the export quota increases, the domestic supply pressure may be relieved; otherwise, the supply pressure will be more severe [65]. Urea Demand Substitute Demand - Synthetic ammonia, as an intermediate product of urea production, is still mainly used for urea production due to the relatively high price difference between urea and synthetic ammonia, and the external sales volume has not increased significantly [107]. - Urea has a cost - performance advantage compared to phosphate and potash fertilizers. The production and export volumes of ammonium sulfate and ammonium chloride have increased significantly in 2025, and the supply - demand pattern of nitrogen fertilizers has become looser, with the price ratio of urea to other fertilizers at a relatively high level [115][141]. Agricultural Demand - Urea agricultural demand is seasonal and rigid. The peak demand season is from March to May, and from June to July, the demand for field crops such as rice and corn is high. After August, it enters the off - season. In 2025, the domestic urea agricultural demand consumption was about 29.48 million tons, with a year - on - year growth rate of about 2.11%, but the growth rate slowed down compared to previous years. In 2026, the growth rate of urea agricultural demand is expected to further slow down [148][161]. Compound Fertilizer Demand - Compound fertilizer accounts for 15% - 20% of the downstream demand for urea. In 2025, the compound fertilizer production was expected to be 58.5 million tons, a year - on - year increase of about 5.10%, but the average operation rate decreased by about 0.40%. In 2026, the over - supply pressure in the compound fertilizer industry will still exist, and the average operation rate may continue to decline, but the demand for urea will still maintain a growth trend [171]. Urea - Formaldehyde Resin Demand - Urea - formaldehyde resin accounts for about 20% of the downstream demand for urea. In 2025, the overall operation rate of formaldehyde increased slightly, and the export demand for panels maintained a growth trend, driving the demand for urea to maintain a small increase. It is estimated that the demand for urea from the urea - formaldehyde resin sector in 2025 was about 10.82 million tons, with a year - on - year growth rate of about 2.5% [170][172]. Melamine Demand - Melamine accounts for about 7% - 10% of the downstream demand for urea. In 2025, the total melamine production was expected to be about 1.52 million tons, a year - on - year decrease of 3.76%, and the demand for urea was about 4.56 million tons, a year - on - year decrease of 170,000 tons. In 2026, the demand for urea from melamine and urea - formaldehyde resin is expected to remain stable, with limited highlights [178]. Off - Season Storage Demand - The new "National Fertilizer Commercial Reserve Management Measures" for the 2024 - 2026 period has some differences compared to previous years, including a reduction in the urea storage ratio, a change in the requirements for individual targets, an extension of the storage period, an adjustment of the storage assessment indicators, and an extension of the release time [190]. Urea Inventory - Enterprise inventory has strong seasonality, usually decreasing in the first half of the year and increasing in the second half. In 2025, due to high supply pressure, the enterprise inventory was at a relatively high level throughout the year, and although there was some destocking in November, the absolute inventory level was still high [199]. - Port inventory is closely related to export policies. After the export quota was officially issued in May 2025, the port inventory increased in an orderly manner. From September to October, with the increase in actual exports, the port inventory decreased rapidly [199]. Urea Supply - Demand Balance Sheet - In 2026, the new production capacity of urea is expected to bring an incremental output of about 2 million tons. The annual output is estimated to be around 75 million tons, with a year - on - year increase of about 4 million tons and a growth rate of about 5.5%. - The export volume is estimated to be about 5.5 million tons, and the annual consumption is estimated to be about 68 million tons. The domestic urea supply - demand will remain in an oversupply pattern throughout the year, and the price will depend on the game between cost and exports [205].

Report Title - EGPF Weekly Strategy 20251228: The Expectation of Future Production Suppresses the Rebound Height of Ethylene Glycol [1][2] Report Industry Investment Rating - Not provided in the document Core Viewpoints - For the eq2605 contract, the downside space of MEG is limited, with support at the [3400] price level. In a scenario of weak cost (oil and coal), high self-valuation, and large-scale production in 2026, the EGO1 price will be under pressure. From an actual situation perspective, the inventory reduction from November to December was quite significant, and the expectation of new device production in the far month still exerts pressure. Attention should be paid to the macro level and device changes. In the medium to long - term fundamental perspective, ethylene glycol may enter a new expansion cycle from 2026 - 2027. Approximately 2.15 million tons of new production capacity will be added in 2026, and there are still many large - scale device production plans after 2027. Therefore, the ethylene glycol price will mostly show a bottom consolidation state later [3]. Summary by Relevant Catalogs 1. Unilateral Analysis 1.1 EG - The explicit inventory has accumulated relatively quickly on a month - on - month basis. The current absolute level is still at a slightly high neutral level compared to historical periods. The port shipment volume has slightly rebounded on a month - on - month basis this period, but the absolute level remains at a historical low. The ethylene glycol inventory of polyester factories has remained flat on a month - on - month basis, and the inventory days of downstream factories are around 14.6, with the overall level being slightly high [8]. - As of December 28, 2025, the overall operating load of ethylene glycol in the Chinese mainland was 72.16% (a month - on - month increase of 0.18%), among which the operating load of ethylene glycol produced by oxalic acid catalytic hydrogenation (syngas) was 76.37% (a month - on - month increase of 0.91%) [8][32]. - In terms of oil - based production, many devices have undergone maintenance or load reduction. For example, Maoming Petrochemical's 220,000 - ton device stopped production in early December, and Zhenhai Refining & Chemical's 650,000 - ton device is operating with a slightly reduced load [8][32]. - In terms of coal - based production, some devices have stopped production due to various reasons, and some are in the process of catalyst replacement or restart [9][33]. - Recently, the cost has rebounded, and the supply side has shown a certain contraction, leading to a rebound in the ethylene glycol price. However, the expectation of new device production in the far month still suppresses the rebound space. In the medium - to - long - term, the ethylene glycol price will mostly show a bottom consolidation state [9][23]. 1.2 PF - During this period, the price center of polyester raw materials has risen, the short - fiber profit has been slightly compressed on a month - on - month basis, and the finished - product inventory of downstream yarn factories has slightly accumulated. - The short - fiber load is currently maintained at a high level, and the absolute inventory level of short - fiber factories has been reduced to a relatively neutral level. The profit of yarn factories has slightly recovered from a low level this period. The raw - material inventory of downstream yarn factories has decreased on a month - on - month basis, and the finished - product inventory has slightly increased. Considering the weakening pattern in 2026 compared to 2025, short - fiber trading should mainly focus on shorting the processing spread at high levels, with a reference processing spread above 1400, or hold PF as a short position in the polyester industry chain [10][75]. 2. Industrial Chain Operation Suggestions - For refineries, traders, terminal customers, and coal - chemical enterprises with high inventory and worried about ethylene glycol price decline, they can hedge 50% of their unsold MEG inventory by short - selling and buy 50% put options to prevent unexpected risks. For example, buy eg2602 - P - 3400 at 19 and short eg2605 at 4200 [5]. - Traders and terminal customers who need to purchase ethylene glycol can buy EG futures contracts according to their procurement plans to prevent price increases, such as buying eg2605 at 3900 [5]. 3. MEG Focus 3.1 Supply - Side Production Rhythm - As of November 2025, the newly put - into - production capacity in the current year was 1.5 million tons, with a capacity growth rate of 5.2%. It is estimated that a total of 1.7 million tons of new capacity will be added in 2025, with a capacity growth rate of 5.9% [20]. 3.2 Demand - Side Production Rhythm - As of November 2025, a total of 2.55 million tons of polyester production capacity has been put into production in the downstream demand side, including 1.25 million tons of polyester bottle - grade chips and 950,000 tons of polyester filament. It is expected that the annual production capacity growth rate will be around 6% [21]. 3.3 Cost Curve - The process with the largest capacity share is taken as the upper - bound anchor of the price, and the process cost with the highest coal - based production profit is taken as the lower - bound anchor of the price. The cost of ethylene glycol produced by the naphtha - to - ethylene method in East China is 5,185 yuan/ton, with a profit of - 1,200 yuan/ton, and the cost of ethylene glycol produced by the coal - to - syngas method is 4,480 yuan/ton, with a profit of - 870 yuan/ton [21]. 4. MEG Supply - Demand Situation 4.1 MEG Load - As of December 25, 2025, the overall operating load of ethylene glycol in the Chinese mainland was 72.16% (a month - on - month increase of 0.18%), among which the operating load of ethylene glycol produced by oxalic acid catalytic hydrogenation (syngas) was 76.37% (a month - on - month increase of 0.91%). Many oil - based and coal - based devices are in a state of maintenance, load reduction, or restart [32]. 4.2 MEG Inventory - The explicit inventory has accumulated relatively quickly on a month - on - month basis. The current absolute level is still at a slightly high neutral level compared to historical periods. The port shipment volume has slightly rebounded on a month - on - month basis this period, but the absolute level remains at a historical low. The ethylene glycol inventory of polyester factories has remained flat on a month - on - month basis, and the inventory days of downstream factories are around 14.6, with the overall level being slightly high [36]. 4.3 MEG Direct Demand - Polyester Load - As of this Friday, the preliminary calculation shows that the polyester load in the Chinese mainland is around 90.4%. The average order days of terminal weaving are 10.06 days, a decrease of 1.01 days compared to last week. The average inventory level of terminal weaving finished products (long - fiber cloth) is 28.33 days, an increase of 0.20 days compared to last week. The average inventory level of terminal weaving enterprises' raw materials (polyester filament) is about 12.94 days, an increase of 3.95 days compared to last week [45][46]. 4.4 MEG Direct Demand - Polyester Inventory Absolute Level - The inventory data of various polyester products such as polyester filament POY, FDY, DTY, and short - fiber are presented in the form of time - series charts, showing their inventory changes over time [55][57]. 4.5 MEG Spread and Basis - When approaching the risk - free arbitrage opportunity, a positive spread position can be established for MEG. The MEG basis reflects the spot situation, but due to the mature basis trading, the overall fluctuation is small. The MEG open interest reflects the degree of long - short divergence [59]. 5. PF Weekly Report 5.1 PF Valuation - From 2025 - 2026, short - fiber production capacity expansion is limited, and there is still support at the lower end of the profit. During this period, the price center of polyester raw materials has risen, the short - fiber profit has been slightly compressed on a month - on - month basis, and the finished - product inventory of downstream yarn factories has slightly accumulated. Considering the weakening pattern in 2026, short - fiber trading should mainly focus on shorting the processing spread at high levels, with a reference processing spread above 1400, or hold PF as a short position in the polyester industry chain [74][75]. 5.2 PF Supply - Demand - The short - fiber supply is maintained at a high level, and the absolute inventory has been reduced to a relatively neutral level. The profit of downstream yarn factories has been relatively stable this period, and the yarn - factory load has been maintained. The raw - material inventory of downstream yarn factories has slightly decreased on a month - on - month basis, and the finished - product inventory has slightly increased, with the current absolute inventory level under slightly high pressure [86][96]. 5.3 PF Basis and Spread - The basis and spread data of PF, such as PF2602 basis, are presented in the document, showing their changes over time [98].

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The polyolefin industry will face continuous capacity pressure in 2026, with a pattern of "low in the first half and high in the second half" for capacity commissioning. The overall price is expected to be weak, with a "high in the first half and low in the second half" rhythm [4][5]. - The key factors affecting the market include capacity commissioning progress, plant operating rates, and imports and exports [7]. 3. Summary by Relevant Catalogs 3.1 Market Review - **Price, Basis, and Calendar Spread**: In 2025, polyolefin prices showed different trends in each quarter. The first - quarter was relatively stable, the second - quarter was affected by macro - events and showed wide - range fluctuations, the third - quarter was in a state of oscillation, and the fourth - quarter experienced a significant decline. The basis and calendar spreads of PP and L also had corresponding changes, mainly affected by factors such as capacity commissioning, demand, and trade conflicts [3][9][10]. - **Disk Spread Review**: The L - PP spread showed a trend of first declining and then recovering. The core reason was the different supply pressures of PP and the demand performance of L [34]. - **Disk Profit**: The methanol price showed a downward trend, and the MTO disk profit first improved and then deteriorated. The production profit of polyolefins was generally better than that of the previous year, but the PE profit weakened significantly at the end of the year [42][95]. 3.2 Capacity Commissioning is the Main Theme - **Domestic Capacity Commissioning**: Both PP and PE are in the capacity commissioning cycle. From 2026 - 2030, the planned new capacity of PP will exceed 20 million tons, and that of PE will exceed 20 million tons. The commissioning rhythm in 2026 is "low in the first half and high in the second half" [64][86]. - **Foreign Capacity Commissioning**: In 2025, the overseas capacity commissioning of PE was about 2.5 million tons, and there are many commissioning plans in 2026, but the actual implementation may fall short of expectations. The overseas capacity commissioning pressure of PP is relatively small [84][87]. - **Production - end Profit**: The cost side was differentiated, and the production profit was generally better than that of the previous year, especially for the coal - based production. However, the PE profit weakened significantly at the end of the year [95]. - **Output Surge**: In 2025, the output of both PP and PE increased significantly. The expected annual output of PP is 40.3053 million tons, a year - on - year increase of 16.96%. The expected annual output of PE is 33.1308 million tons, a year - on - year increase of 18.69% [138][141]. - **Imports and Exports**: For PP, the import and export pattern reversed in 2025, with a significant decrease in net imports. For PE, the import pressure remained high, and the import volume was still large [145][164]. 3.3 Demand Side - **PP Demand**: The demand for PP was high in the first half and low in the second half. After the Spring Festival, the downstream demand recovered rapidly, but from the second quarter, the demand gradually weakened, mainly affected by export shocks and the slowdown of domestic economic demand [185]. - **PE Demand**: The demand for PE was relatively rigid, with obvious seasonality. The demand was strong during the peak seasons of mulch film and greenhouse film, but faced pressure during the off - seasons [193]. 3.4 Inventory - **PP Inventory**: The PP inventory remained at a high level throughout the year. After the Spring Festival, the inventory increased seasonally, and then decreased during the peak demand season in March. From the second quarter, the inventory basically remained at a high level in previous years [213]. - **PE Inventory**: At the end of 2024, the LLDPE inventory was low. After the Spring Festival, the inventory was tight due to the peak demand season of agricultural films, and then gradually eased [225]. 3.5 Supply - Demand Balance Sheet - **PP Annual Supply - Demand Balance Sheet**: In 2026, the supply growth rate of PP will slow down, but the demand still needs to reach a high level to achieve supply - demand balance. The supply - demand pressure is still large, and the pressure in the first half of the year is less than that in the second half [237][240]. - **PE Annual Supply - Demand Balance Sheet**: In 2026, both the supply and demand of PE will slow down, and the inventory accumulation pattern will continue. Attention should be paid to the commissioning rhythm and the realization of peak demand seasons. The demand for PE is more resilient than that for PP [249][250].