1. Report Industry Investment Rating - Not provided in the content 2. Core View of the Report - The geopolitical situation between the US and Iran continues to drive up international oil prices, significantly boosting the cost support of polyolefins and the futures prices. For PE, the supply pressure remains due to high - level operation and limited planned maintenance, and the demand is in the seasonal off - season. The cost support is strong in the short term, and attention should be paid to the inventory removal rhythm after the Spring Festival. For PP, the cost support is also rising, the supply pressure is acceptable in the short term, the demand is in the off - season, and attention should be paid to the geopolitical situation and the inventory removal rhythm after the downstream resumes work [3][4] 3. Summary According to the Directory 3.1 Market News and Important Data - **Price and Basis**: The closing price of the L main contract is 6777 yuan/ton (- 43), the PP main contract is 6720 yuan/ton (- 26), LL North China spot is 6680 yuan/ton (+30), LL East China spot is 6780 yuan/ton (+0), PP East China spot is 6680 yuan/ton (+0). The LL North China basis is - 97 yuan/ton (+73), the LL East China basis is 3 yuan/ton (+43), and the PP East China basis is - 40 yuan/ton (+26) [1] - **Upstream Supply**: The PE operating rate is 88.4% (+1.1%), and the PP operating rate is 75.9% (- 0.1%) [1] - **Production Profit**: The PE oil - based production profit is - 229.6 yuan/ton (- 143.8), the PP oil - based production profit is - 569.6 yuan/ton (- 143.8), and the PDH - based PP production profit is - 487.9 yuan/ton (- 36.6) [1] - **Import and Export**: The LL import profit is - 24.7 yuan/ton (+79.9), the PP import profit is - 332.5 yuan/ton (- 83.2), and the PP export profit is - 54.3 US dollars/ton (+0.0) [2] - **Downstream Demand**: The PE downstream agricultural film operating rate is 24.7% (- 5.4%), the PE downstream packaging film operating rate is 20.3% (+0.0%), the PP downstream plastic weaving operating rate is 24.1% (- 3.8%), and the PP downstream BOPP film operating rate is 42.8% (- 17.5%) [2] 3.2 Market Analysis - **PE**: The supply pressure remains due to many short - term restarting devices, high - level operation, limited planned maintenance in the later first quarter, and increased standard product production. The demand is in the seasonal off - season, waiting for the peak season of PE mulching films to resume work and replenish stocks. The upstream inventory accumulates as expected after the festival, the downstream resumes work slowly, and the spot trading is light. The plastic's basic situation of strong supply and weak demand continues, and the cost support is strong in the short term [3] - **PP**: Geopolitical disturbances push up oil prices and the cost support. The PDH profit is slightly repaired but still in a deep loss. The overall PP operating rate rises limitedly, and the supply pressure is acceptable in the short term. The demand is in the off - season, and the downstream operating rates continue to decline. The cost increase boosts the price in the short term [4] 3.3 Strategy - **Unilateral**: Cautiously go long and hedge for LLDPE and PP at low prices [5] - **Inter - period**: Cautiously shrink the L05 - 09 spread at high prices [5] - **Inter - variety**: Cautiously shrink the L - PP spread at high prices [5]