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].

Report Industry Investment Rating No relevant content provided. Core Viewpoints - Multiple index - type ETFs saw increased trading volume during intraday trading, driving the stock index to rebound. The Fed cut interest rates by 25 BP again. The Political Bureau meeting set the tone for 2026, maintaining a loose policy, and the Economic Work Conference made directional arrangements. In the medium - to - long term, the domestic market is characterized by a liquidity narrative, with a continuous influx of incremental funds, and the stock index still has upward momentum after consolidation [3]. - The international situation is complex, and positive results have been achieved in China - US economic and trade consultations. The US has entered a new interest - rate cut cycle, which is beneficial for the appreciation of the RMB and the return of foreign capital, bringing new incremental funds. Current policies to stabilize the capital market are positive, and the bottom line of the stock index is clear. The Political Bureau meeting and the Economic Work Conference have given directional guidance, including the continued implementation of more proactive and effective macro - policies, efforts to stabilize the real estate market, and greater emphasis on the role of the "strong domestic market" in expanding domestic demand. After the risk - free interest rate drops to a low level, the entry of medium - to - long - term funds and residents into the market will enter a new cycle. Future index trends need to focus on trading volume, and if the trading volume of the two markets can remain above 2 trillion yuan, the relatively strong trend can be maintained [4]. Summary by Directory Market Performance - This week, domestic stock indices continued to fluctuate. From the perspective of global indices, as of December 19, 2025, the Nasdaq index rose 0.48%, the S&P 500 index rose 0.1%, but the Hang Seng Technology Index fell 2.82%. The Shanghai Composite Index rose 0.03%, the CSI 1000 index fell 0.56%, the SSE 50 index rose 0.32%, the ChiNext index fell 2.26%, and the STAR 50 index fell 2.99%. In terms of industries, the 31 Shenwan primary industry indices showed divergent trends this week, with sectors such as commercial retail, non - bank finance, and social services leading the gains, while sectors such as electronics, power equipment, and machinery leading the losses [11][15]. Liquidity - In November, the growth rate of the total social financing scale was stable, while the growth rates of M2 and M1 declined. As of November, the balance of M2 was 336.99 trillion yuan, a year - on - year increase of 8.5% (previous value 8.2%). The balance of narrow - money (M1) was 112.88 trillion yuan, a year - on - year increase of 4.9% (previous value 6.2%), and the M2 - M1 gap widened to 3.1 percentage points. The funds rate (DR007) remained at a low level, and in November, the net MLF investment was 100 billion yuan. The yield of 10 - year treasury bonds was around 1.85%. Direct financing became the main support for social financing, with government bonds making a prominent contribution. At the end of November, the stock of social financing increased by 8.5% year - on - year (unchanged from the previous value), and the cumulative increment in the first 11 months was 33.39 trillion yuan, an increase of 8.99 trillion yuan year - on - year. The new social financing in November was 2.49 trillion yuan, mainly driven by direct financing such as government bonds and corporate bonds [13][16]. Trading Data and Emotions - This week, the trading volume of the two markets shrank slightly, and the stock index maintained a volatile pattern. From January to November 2025, retail investors in the A - share market opened a cumulative total of 24.9402 million new stock accounts, a year - on - year increase of 7.95%. The growth rate of institutional investor account openings was even more rapid, with a cumulative total of 93,400 new accounts, a year - on - year increase of 36%. The trading volume (MA5) of the two markets shrank to less than 2 trillion yuan again, and liquidity is an important factor supporting the current index and needs continuous tracking [23][24]. Index Valuation - The absolute valuation of the indices is at a low level, but the quantiles are relatively high. As of December 19, 2020, the latest PB of the Shanghai Composite Index was 16.26, with a quantile of 79.25, and the latest PB of the entire A - share market was 21.79, with a quantile of 82.18. Among the major stock indices, the quantiles of the CSI 1000 > CSI 500 > CSI 300 > SSE 50 [30][35]. Index Industry Weights (as of June 30, 2025) - In the SSE 50, the weights of the banking, non - bank finance, and food and beverage industries are relatively high, at 21.31%, 15.48%, and 13.88% respectively, and the electronics industry has become the fourth - largest weighted industry. The weights of the CSI 300 are relatively dispersed, and the top three weighted industries are banking, non - bank finance, and electronics. The top three weighted industries of the CSI 500 are electronics, pharmaceutical biology, and non - bank finance. The top three weighted industries of the CSI 1000 are electronics, pharmaceutical biology, and computers [40][41]. Other Overseas and Domestic Policy Tracking - Domestic policy tracking shows that from May to December 2025, a series of policy measures were introduced, including reducing the reserve requirement ratio, lowering policy and provident fund interest rates, establishing a 300 - billion - yuan service consumption and elderly care refinancing loan, supporting Central Huijin to play the role of a "stabilization fund", and deepening the reform of the STAR Market, ChiNext, and Beijing Stock Exchange. The current domestic fiscal and monetary policies are loose, and continuous policy stimuli are introduced to stabilize the economy. The "1 + 1" system based on the new "National Strength Articles" supports the development of the capital market, with a focus on the development of science and technology innovation and green development. High - tech sectors, especially low - penetration tracks, have received capital support and are迎来 long - term allocation opportunities [46][50].

Industry Investment Rating - No relevant information provided Core Viewpoints - The MEG has limited downside space and has support at the [3400] price level. In the context of weak cost (oil and coal), high self - valuation, and large - scale production in 2026, the EGO1 price is under continuous pressure. From a realistic perspective, the inventory accumulation amplitude from November to December is relatively obvious, and there is still pressure from the expectation of new device production in the far - month. In the medium - to - long - term fundamental cycle, ethylene glycol may enter a new expansion cycle from 2026 - 2027. New production in 2026 is about 2.15 million tons, and there are still many large - scale device production plans after 2027. Therefore, the ethylene glycol price will show a bottom - consolidation state later [3]. Summary by Directory 1. Single - side Situation EG - The explicit inventory has accumulated relatively quickly on a month - on - month basis, and the absolute level is still at a neutral level in the same period of history. The port shipment volume has slightly rebounded on a month - on - month basis this cycle, and the absolute level has reached a low level over the years. The MEG port inventory in the main ports of East China is about 795,000 tons (a month - on - month increase of 70,000 tons). The ethylene glycol inventory of polyester factories has remained flat on a month - on - month basis, and the inventory days of downstream factories are about 14.2 days, with an overall slightly higher - than - neutral level. As of December 11, the overall ethylene glycol operating load in mainland China is 69.98% (a month - on - month decrease of 3.01%), and the operating load of ethylene glycol produced by oxalic acid catalytic hydrogenation (syngas) is 72.17% (a month - on - month decrease of 0.41%). Many oil - based and coal - based devices have carried out or planned maintenance [7][8]. PF - This cycle, the price center of polyester raw materials has moved down, the short - fiber profit has slightly recovered on a month - on - month basis, and the finished - product inventory of downstream yarn mills has remained stable. The short - fiber load has remained high, and the absolute inventory level of short - fiber factories has decreased to a relatively neutral level. The profit of yarn mills has slightly recovered at a low level this cycle. The raw - material inventory of downstream yarn mills has remained stable on a month - on - month basis, and the finished - product inventory has run smoothly. The short - fiber production capacity expansion is limited from 2025 - 2026, and there is still support for the profit [9][66]. 2. MEG Key Concerns Supply - side Production Rhythm - Before the production: A 460,000 - ton syngas - to - ethylene glycol new device of Sichuan Wuguo Kai was put into production in the middle of the month and was included in the production and sales statistics in June; a 900,000 - ton/year ethylene glycol device of Shandong Yuxian Chemical was put into production in September and was included in the production base in October. As of November 2025, the newly added production capacity in the current year is 1.5 million tons, with a production - capacity growth rate of 5.2%. A 200,000 - ton/year coal - to - ethylene glycol new device of Ningxia Kunpeng is expected to be put into production by the end of the year. It is estimated that the total newly added production capacity in 2025 is 1.7 million tons, with a production - capacity growth rate of 5.9% [18]. Demand - side Production Rhythm - As of November 2025, the total polyester production capacity put into production in the downstream demand side is 2.55 million tons, including 1.25 million tons of polyester bottle - chips and 950,000 tons of polyester filament. As of November 2025, the newly added production capacity in the current year is 2.55 million tons, with a production - capacity growth rate of 3.0%. There is still about 2.5 million tons of polyester production capacity to be put into production this year, and the expected annual production - capacity growth rate is about 6% [19]. Cost Curve - The process with the largest production - capacity proportion is taken as the upper - marginal anchor of the price; the process cost with the highest coal - to - ethylene glycol profit is taken as the lower - marginal anchor of the price. The enterprise production - capacity proportion of the naphtha - to - ethylene method in the ethylene method is the largest, accounting for 60% of the total ethylene - glycol production capacity. The cost of the ethylene - glycol naphtha - to - ethylene method in East China is 5185 yuan/ton, and the profit is - 1200 yuan/ton. The cost of the single - chain coal - to - ethylene glycol in East China is 4480 yuan/ton, and the coal - to - ethylene glycol profit is - 870 yuan/ton [19]. 3. MEG Supply - and - Demand Situation Load - As of December 11, the overall ethylene glycol operating load in mainland China is 69.93% (a month - on - month decrease of 3.01%), and the operating load of ethylene glycol produced by oxalic acid catalytic hydrogenation (syngas) is 72.17% (a month - on - month decrease of 0.41%). Many oil - based and coal - based devices have carried out or planned maintenance [30]. Inventory - The explicit inventory has accumulated relatively quickly on a month - on - month basis, and the absolute level is still at a neutral level in the same period of history. The port shipment volume has slightly rebounded on a month - on - month basis this cycle, and the absolute level has reached a low level over the years. The MEG port inventory in the main ports of East China is about 795,000 tons (a month - on - month increase of 70,000 tons). The ethylene glycol inventory of polyester factories has remained flat on a month - on - month basis, and the inventory days of downstream factories are about 14.2 days, with an overall slightly higher - than - neutral level [34]. Direct Demand - Polyester Load - A set of polyester filament and short - fiber devices have been shut down for maintenance this week, and a set of long - shut - down filament devices is warming up for restart but has not produced products normally yet. In addition, the load of other devices has been adjusted locally. As of this Friday, the preliminary calculation shows that the polyester load in mainland China is around 91.2%. As of December 11, the average order days of terminal weaving are 11.90 days, a decrease of 0.41 days compared with last week. The current market sales are still mainly winter fabrics. The spring orders for domestic and foreign trade have started, but the overall order quantity is not good. The new orders are mainly "small and scattered orders", and large orders are scarce. The average order days this week have continued to decline compared with last week. As of December 11, the average inventory level of terminal weaving finished products (long - fiber market) is 25.58 days, an increase of 0.96 days compared with last week. The large winter orders for domestic and foreign trade are scarce, and the current situation is mainly based on rigid - demand replenishment and previous contract delivery. The new large - batch orders are scarce, and the finished - product grey - cloth inventory has slowly climbed to 20 - 30 days. The market generally expects that there will be no improvement before the Spring Festival. As of December 11, the average inventory level of terminal weaving enterprise raw materials (polyester filament) is about 9.50 days, remaining stable compared with last week [40]. Direct Demand - Polyester Inventory - The absolute level of polyester inventory is relatively neutral [46]. Spread and Basis - When approaching the risk - free arbitrage opportunity, a positive spread can be arranged for MEG month - spread; the MEG basis reflects the spot situation, but due to the mature basis trade, the overall fluctuation is small; the MEG open interest reflects the degree of long - short divergence [52]. 4. PF Situation Valuation - From 2025 - 2026, the short - fiber production capacity expansion is limited, and there is still support for the profit. This cycle, the price center of polyester raw materials has moved down, the short - fiber profit has slightly recovered on a month - on - month basis, and the finished - product inventory of downstream yarn mills has remained stable. The short - fiber load has remained high, and the absolute inventory level of short - fiber factories has decreased to a relatively neutral level. The profit of yarn mills has slightly recovered at a low level this cycle. The raw - material inventory of downstream yarn mills has remained stable on a month - on - month basis, and the finished - product inventory has run smoothly [65][66]. Supply - The short - fiber supply has remained at a high level, and the absolute inventory has decreased to a relatively neutral level [78]. Downstream - The profit of downstream yarn mills has run stably this cycle, and the yarn - mill load has remained stable. The raw - material inventory of downstream yarn mills has slightly decreased on a month - on - month basis, and the finished - product inventory has slightly accumulated. Currently, the absolute inventory level has a slightly higher pressure [84][90]. Spread and Basis - Information on PF2601 basis, PF1 - 2 month - spread, 1.4D direct - spinning polyester staple fiber processing fee, and PF2601 disk profit is provided, but specific analysis is not given in the summary [67][69].

Report Title - [EB Weekly Strategy 20251214] Stock Game in the Industrial Chain, Styrene Stronger than Pure Benzene [1][2] Report Industry Investment Rating - Not provided in the content Core Viewpoints - For the contract eb2602, wait for short - selling opportunities for styrene, but the upside space may also be large. In 2026, the pressure on pure benzene is high. In terms of production, the output of petroleum benzene will increase significantly after the commissioning of cracking units in the second half of the year and the resumption of factory operations after maintenance. The import volume will also be relatively high, with an expected annual import increase of nearly 20%. The demand for pure benzene is mainly from styrene, but the overall demand growth is slow, and the inventory pressure is large. The production pressure of styrene is concentrated in Q4 2025, with new capacity coming on - stream. The profit repair of styrene is under pressure, and the processing fee is in the range of [200, 850] yuan/ton [3]. - The long - term logic is that the cost side of pure benzene is in a large - scale production cycle with high load and high imports. The overall supply - demand pressure of pure benzene is large, and the profit is under pressure in the medium - long term. For styrene, the supply pressure remains high, and the demand side is weak, so the short - term suggestion is to wait and see, and then choose to short after the absolute price rebounds [10][11]. Summary According to the Directory Upstream Overview - Toluene and Pure Benzene Spreads - Toluene - naphtha spreads in America, Europe, and Asia are presented in graphs from 2018 - 2025, with daily update frequencies [17][19][21]. - Benzene - toluene spreads in America, Europe, and Asia are also presented in graphs from 2018 - 2025, with daily update frequencies [23][26][28]. - Styrene spot price in East China and pure benzene profit in China are shown in graphs from 2018 - 2025 [30][32]. Upstream Overview - Pure Benzene Supply and Demand - **Supply**: The output of petroleum benzene this cycle is 43.76 tons, a decrease of 0.10 tons from last week, with a growth rate of - 0.23%, and the capacity utilization rate is 75.11%, a decrease of 0.17% from last week. The domestic benzene hydrogenation unit operating rate is 52.94%, a decrease of 2.14% from last week, and the weekly output is 6.95 tons, a decrease of 0.28 tons from last week [35]. - **US - Asia Spread**: The price of pure benzene in South Korea has fallen this week, while the price in the US is stable. The arbitrage window between South Korea and the US is partially open, and about 2 tons of pure benzene from South Korea have been sold to the US under the shipping contract. The expected import volume in December is about 467 tons/month, and about 45 tons in January [36]. Pure Benzene Downstream Profit and Load - **Profit**: The comprehensive profit of pure benzene downstream has been compressed this cycle. The non - integrated profit of styrene has been compressed, currently at about - 82 yuan/ton. The profit of caprolactam has been repaired, while the profits of phenol, adipic acid, and aniline are relatively stable or slightly compressed. Aniline has relatively good profit, while adipic acid, caprolactam, and phenol have poor profits [67]. - **Load**: The operating rates of major downstream products such as styrene, adipic acid, phenol, aniline, and caprolactam have decreased this week. Next period, the operating rates of caprolactam and styrene are expected to increase, while those of phenol and aniline are expected to decrease, and the comprehensive operating rate of downstream products will decrease [68]. Styrene Supply and Demand Operation - **Supply - Side Production Rhythm**: As of November 2025, the newly - added capacity in the current year is 237 tons, with a capacity growth rate of 11%. It is estimated that the newly - added capacity in 2025 will be 257 tons, with a capacity growth rate of 11.78%, and 67 tons in 2026, with a capacity growth rate of 3% [95]. - **Demand - Side Production Rhythm**: As of November 2025, the total newly - added capacity of the three major downstream products is 190.5 tons. It is estimated that the total downstream production growth rate this year will be about 11.71%, and about 38% in 2026 [96]. - **Cost Curve**: Styrene has all - oil - based production capacity, divided into integrated (about 10%) and non - integrated (about 30%). Non - integrated plants are more sensitive to profit [97]. - **Profit and Load**: The valuation of styrene has been compressed recently, with non - integrated profit at about - 82 yuan/ton. This week (20251205 - 20251211), the output of Chinese styrene plants is 33.88 tons, a decrease of 0.36 tons from the previous period, with a capacity utilization rate of 88.11%, a decrease of 0.74% from the previous period [98][99]. - **US - Dollar Spread and Import - Export**: The European styrene market has fallen this week, the Asian market has been slightly stronger, and the US Gulf market has fallen. The international oil price is expected to rise slightly next week. The price difference between China and Europe and the US has narrowed, and the arbitrage window is closed. China's styrene exports are mainly to nearby regions [100]. EPS, PS, ABS Profit, Load, and Inventory - **EPS**: The output this week (20251205 - 1211) is about 8.91 tons, a decrease of 0.43 tons from last week, with a capacity utilization rate of 3.77%, a decrease of 2.59% from last week [209]. - **PS**: The output from December 5 - 11, 2025, is 9.6 tons, a decrease of 0.1 tons from the previous period, with a capacity utilization rate of 58.3%, a decrease of 0.7% from last week [209]. - **ABS**: The output this week (20251204 - 20251211) is 15 tons, an increase of 0.47 tons from last week, with a capacity utilization rate of 70.53%, an increase of 2.23% from last week [209]. Three - Major Downstream Comprehensive Operation - The downstream profit has been slightly compressed, and the load has been relatively stable. The production of ABS has increased, while the production of EPS and PS has decreased [208][209].