Core Viewpoint - The overall performance of polyolefins continues to be weak, with prices hitting new lows for the year, and the outlook remains bearish due to high supply and seasonal demand decline [2][18] Reality Factors - The primary pressure on polyolefins is high supply, with polypropylene weekly production reaching 808,000 tons (historical high), up 136,900 tons year-on-year, and polyethylene weekly production at 681,600 tons (historical high), up 117,500 tons year-on-year [3][19] - Inventory levels for polypropylene and polyethylene are also high, with respective inventories of 812,600 tons and 927,100 tons, up 194,000 tons and 96,300 tons year-on-year [3][20] - Demand is entering a seasonal decline, particularly for polyethylene, where key downstream sectors have seen a decrease in operating rates and orders for over four weeks [3][20] Expectation Factors - The large-scale capacity expansion in the polyolefin sector is leading to a more relaxed supply-demand balance, making shorting the industry profit a core trading logic [8][24] - Future capacity additions include 5.65 million tons for polypropylene and 6.78 million tons for polyethylene, which will further increase supply pressure [8][24] - The expectation is that polyolefin prices will follow other industrial products in a rebound, but the extent of the rebound will be weaker compared to other products [8][24] Summary - From a hedging perspective, the high production and inventory levels suggest that it is more suitable for industry players to hedge during price rebounds to alleviate inventory and sales pressure [10][25] - The current market dynamics favor downward price movements for polyolefins, making them a better choice for inter-product arbitrage [10][25]