1. Report Industry Investment Rating - Not provided in the given content 2. Core View of the Report - The L main 2605 contract is recommended for observation, focusing on the support at the previous low of 6600 points; the PP main 2605 contract is recommended for a small - scale short - trial, and a stop - loss should be set at the recent low of 6620 points. For arbitrage and options, the recommendation is to observe [2] 3. Summary According to Relevant Catalogs Market Situation - L plastic: The L main 2605 contract closed at 6644 points, down 90 points or 1.34%. The LLDPE market price was stable, and it was a market with prices but no transactions before the festival. The mainstream transaction prices in North China were in the range of 6520 - 6900 yuan/ton, and in East China, they were in the range of 6620 - 7000 yuan/ton [1] - PP polypropylene: The PP main 2605 contract closed at 6568 points, down 80 points or 1.20%. The domestic PP market price changed little before the festival. In North China, the price of PP continued to consolidate, and the mainstream transaction price of drawstrings was in the range of 6460 - 6570 yuan/ton, unchanged from the previous trading day [1] Important Information - The Waste Technical Adaptation Committee of the EU's "Single - Use Plastics Directive" approved a draft implementation act, clarifying the accounting rules for recycled polyethylene terephthalate (PET) in the minimum recycled content indicator of plastic beverage bottles. The current minimum recycled content requirement for EU plastic beverage bottles is 25%, which will be increased to 30% in 2030. The draft has two major adjustments: allowing the use of a certified mass - balance method and including chemically recycled PET in the recycled content indicator statistics; and stipulating that as of November 2027, recycled PET produced outside the EU cannot be included in the minimum recycled content indicator of PET beverage bottles. These measures are expected to protect EU PET bottle producers and encourage investment in relevant production facilities [1] Logical Analysis - As of before the festival, the registered warehouse receipts of the DCE L contract remained at 0.94 million tons, a year - on - year increase of 43.2%; the registered warehouse receipts of the DCE PP contract increased by 6.6% to 1.87 million tons, a year - on - year increase of 94.2%. In January, the monthly maintenance loss of LLDPE increased to 134,000 tons, a year - on - year increase of 37.1%, which is favorable for L [2] Trading Strategy - **Unilateral**: Observe the L main 2605 contract and focus on the support at the previous low of 6600 points; for the PP main 2605 contract, conduct a small - scale short - trial and set a stop - loss at the recent low of 6620 points [2] - **Arbitrage (long - short)**: Observe [2] - **Options**: Observe [2]

1. Report's Industry Investment Rating - The investment view for both PE and PP is "oscillation", indicating that in the short - term, the market is expected to have an amplitude between - 5% and 5% [3][4] 2. Report's Core View - The short - term market for both PE (LLDPE) and PP lacks obvious driving forces, and it is expected that the market will mainly move in an oscillatory pattern [3][4] 3. Summary According to Relevant Catalogs PE Fundamental Changes Supply - This week, China's total polyethylene production was 69.89 tons, a 4.34% increase from last week, and the capacity utilization rate of Chinese polyethylene production enterprises was 84.67%, a 3.07 - percentage - point increase from the previous period. Although there were new maintenance plans in some enterprises, the restart of 10 previously shut - down units led to an increase in capacity utilization [3] Demand - The average operating rate of downstream products of Chinese LLDPE/LDPE decreased by 0.9% compared with the previous period, and the average operating rate of downstream polyethylene products decreased by 0.3%. The cumulative import volume in 2025 was 13.407 million tons, a year - on - year decrease of 3.21%. In December 2025, the import volume was 1.3299 million tons, a year - on - year increase of 4.62% and a month - on - month increase of 25.21% [3] Inventory - The sample inventory of Chinese polyethylene production enterprises was 335,000 tons, a 4.37% decrease from the previous period, and the sample inventory of polyethylene social warehouses was 477,400 tons, a 1.43% decrease from the previous period. The inventory decline was mainly due to production enterprises' price cuts to reduce inventory [3] Cost - The oil - based production cost increased by 4 yuan/ton compared with the previous period, while the coal - based, ethylene - based, methanol - based, and ethane - based production costs decreased by 33, 129, 244, and 66 yuan/ton respectively [3] Profit - The import profit of LLDPE, HDPE, and LDPE decreased compared with the previous period. The overall profit of PE was lower than the same period last year [3][26] Import and Export - PE exports were better than the same period last year [29] PP Fundamental Changes Capacity and Production - This week, the domestic polypropylene production was 784,900 tons, a 0.53% increase from last week and a 9.36% increase from the same period last year. The average capacity utilization rate of polypropylene was 76.02%, a 0.40% increase from the previous period [4] Inventory - The total commercial inventory of Chinese polypropylene decreased by 2.21% from the previous period, the production enterprise inventory increased by 0.43%, the inventory of sample trading enterprises decreased by 6.15%, and the inventory of sample port enterprises decreased by 7.51%. Overall, the inventory at various levels was higher than the same period last year, except for port inventory which was lower [4][47][54] Downstream Demand - The downstream demand for PP showed significant divergence. The average operating rate of polypropylene increased by 0.34 percentage points to 52.87%. As the temperature dropped, the demand in downstream industries such as plastic weaving and transparent PP entered a seasonal off - season [4] Cost and Profit - This week, the profits of oil - based, coal - based, methanol - based, and PDH - based PP production were restored, while the profit of PP production from externally purchased propylene declined. The average import profit of Chinese polypropylene samples was - 352.61 yuan/ton, a 44.60% decrease from last week. The production profit was similar to the same period last year [4][82]

1. Report Industry Investment Rating - The investment ratings for LLDPE and PP are both "Oscillation" [3][4] 2. Core Views - LLDPE is experiencing a low - level recovery, but the rebound is limited. Short - term market trends lack obvious driving forces and are expected to be mainly oscillatory [2][3] - PP has insufficient driving forces, and the rebound is also limited. The short - term market is expected to oscillate [4] 3. Summary by Relevant Catalogs 3.1 LLDPE Analysis Supply - This week, China's polyethylene production totaled 686,800 tons, a 0.52% increase from last week. The capacity utilization rate of Chinese polyethylene producers was 83.67%, a 0.43 - percentage - point increase from the previous period [3] Demand - The average operating rate of LLDPE/LDPE downstream products in China decreased by 0.2% from the previous period. The overall operating rate of agricultural film decreased by 1.1%, while the operating rate of PE packaging film increased by 0.6%. In November, China's polyethylene imports were 1.0622 million tons, a year - on - year decrease of 9.93% and a month - on - month increase of 5.04% [3] Inventory - The sample inventory of Chinese polyethylene producers was 395,400 tons, a 24,700 - ton increase from the previous period, a 6.66% month - on - month increase. The inventory of polyethylene social sample warehouses was 475,100 tons, a 3,600 - ton increase from the previous period, a 0.77% month - on - month increase and a 19.11% year - on - year increase [3] Basis - The current basis of the main contract is around 160, with the futures price at a discount [3] Profit - The costs of coal - to - and ethane - to - polyethylene production increased by 59 yuan/ton and 248 yuan/ton respectively compared to the previous period. The costs of oil - to - and ethylene - to - polyethylene production decreased by 5 yuan/ton and 129 yuan/ton respectively. The cost of methanol - to - polyethylene production remained the same as last week [3] Valuation - The absolute spot price is low, and the main contract is at a discount [3] Macro - Geopolitical conflicts have intensified, posing a risk of rising international oil prices. The macro sentiment is positive, and the RMB has appreciated [3] 3.2 PP Analysis Supply - This week, China's polypropylene production was 779,200 tons, a 13,400 - ton decrease (1.69% decline) from last week and a 38,700 - ton increase (5.23% increase) compared to the same period last year. The average capacity utilization rate of polypropylene was 75.47%, a 1.27% month - on - month decrease [4] Demand - The average operating rate decreased by 0.16 percentage points to 52.60%. After New Year's Day, cold weather in northern China affected outdoor construction, leading to a decline in the demand for ton bags, woven bags, and outdoor pipe network construction. The CPP sample enterprise average operating rate decreased by 2.18% from last week [4] Inventory - The total commercial inventory of Chinese polypropylene was 743,500 tons, a 9,300 - ton increase from the previous period, a 1.26% month - on - month increase. The inventory of Chinese polypropylene producers was 467,700 tons, a 23,000 - ton decrease from the previous period, a 4.69% month - on - month decrease [4] Basis - The current basis of the main contract is around - 254, with the futures price at a premium [4] Profit - This week, the profits of oil - to -, coal - to -, methanol - to -, externally - sourced propylene - to -, and PDH - to - polypropylene production all recovered. The average weekly profit of Chinese polypropylene import samples was - 288.03 yuan/ton, a 55.30 - yuan increase from last week, a 16.11% month - on - month increase [4] Valuation - The absolute spot price is low, and the main contract is at a premium [4] Macro Policy - Geopolitical conflicts have intensified, posing a risk of rising international oil prices. The macro sentiment is positive, and the RMB has appreciated [4] 3.3 Main Weekly Data Changes Review - PP futures price increased from 6348 yuan/ton to 6514 yuan/ton, a 2.61% increase; PE futures price increased from 6472 yuan/ton to 6674 yuan/ton, a 3.12% increase [5] - PP production decreased by 12.21%; PE production increased by 0.52% [5] - PP spot price increased from 6140 yuan/ton to 6260 yuan/ton, a 1.95% increase; LLDPE spot price increased from 6310 yuan/ton to 6410 yuan/ton, a 1.58% increase [5]

Report Summary 1. Industry Investment Rating No industry investment rating is provided in the report. 2. Core Views - For LLDPE, the spot price is stable, and the futures market is oscillating with a slightly upward trend. In the short - term, there is no obvious driving force, and it is expected to oscillate mainly [2]. - For PP, the spot price is stable, and the futures market is oscillating with a slightly downward trend. In the short - term, there is no obvious driving force, and it is expected to oscillate mainly [3]. 3. Summary by Directory LLDPE Analysis - **Supply**: This week, China's LLDPE production was 318,900 tons, up 3.21% from last week. The capacity utilization rate of Chinese polyethylene producers was 83.95%, an increase of 1.86 percentage points from the previous period. There were no new maintenance devices this week, and some existing devices restarted [2]. - **Demand**: The average operating rate of Chinese LLDPE/LDPE downstream products increased by 1.64% from the previous period. The cumulative import volume in 2025 was 8.9816 million tons, a year - on - year decrease of 0.84%. In August, China's polyethylene imports decreased year - on - year and month - on - month [2]. - **Inventory**: The inventory of Chinese polyethylene producers was 488,600 tons, up 27.67% from the previous period. The inventory trend changed from decreasing to increasing. The social sample warehouse inventory of polyethylene was 546,600 tons, a month - on - month decrease of 2.44% and a year - on - year decrease of 15.44% [2]. - **Basis**: The current basis of the main contract is around 315, and the futures price is at a discount [2]. - **Profit**: This week, the cost of ethane production increased, while the costs of oil - based, coal - based, ethylene - based, and methanol - based production decreased. International oil prices fell due to the easing of the Palestine - Israel situation and potential risks from US tariff issues [2]. - **Valuation**: The spot price and the absolute futures price are neutral, and the near - month contract is at a deep discount [2]. - **Macro Policy**: The macro - sentiment has subsided, trading has returned to fundamentals, and the futures market is oscillating with a slightly upward trend [2]. PP Analysis - **Supply**: The average capacity utilization rate of polypropylene was 77.75%, a month - on - month increase of 1.14%. The average capacity utilization rate of Sinopec was 79.69%, a month - on - month decrease of 0.17% [3]. - **Demand**: The operating rate increased by 0.59 percentage points to 51.45%. After the Mid - Autumn Festival and National Day holidays, the demand for terminal food packaging and medical non - woven fabrics increased [3]. - **Inventory**: The inventory of Chinese polypropylene producers was 681,400 tons, a month - on - month increase of 30.96%. The port sample inventory and the inventory of trading companies also increased [3]. - **Basis**: The current basis of the main contract is around - 12, and the futures price is around par [3]. - **Profit**: This week, the profits of external propylene - based and PDH - based PP production improved, while the profits of oil - based, coal - based, and methanol - based PP production declined. International oil prices rose, and the price of thermal coal remained strong [3]. - **Valuation**: The spot price and the absolute futures price are neutral, and the near - month contract is at a premium [3]. - **Macro Policy**: The macro - sentiment has subsided, trading has returned to fundamentals, and the futures market is oscillating with a slightly downward trend [3]. Main Weekly Data Changes - **Prices**: PP futures price decreased by 1.90%, PE futures price decreased by 1.62%, PP spot price decreased by 2.61%, and LLDPE spot price decreased by 0.69% [5]. - **Production**: PP production decreased by 7.25%, PE production increased by 3.04%, HDPE production increased by 1.45% [5]. - **Operating Rates**: PP operating rate increased by 5.40%, PE operating rate increased by 2.26% [5]. - **Inventory**: PP factory inventory increased by 52.16%, PE social inventory decreased by 4.63% [5].

Report Industry Investment Rating - The report gives a rating of "oscillating operation" for the plastics industry [1] Core Viewpoint - The plastics market is expected to oscillate at a low level in the near future due to factors such as increased supply from restarted and newly - commissioned plants, low downstream demand, high inventory pressure, and falling energy prices [1] Summary by Related Catalogs Strategy Analysis - Recommend to close long positions. The restart of maintenance devices has increased the plastics operating rate to about 87%, reaching a neutral level. The downstream operating rate of PE has decreased to 38.69%, with a decline in agricultural film orders and a slight increase in packaging film orders. Petrochemical inventory is at a neutral level. The US tariff increase and restricted ethane imports, along with the cooling of geopolitical risks in the Middle East and falling oil prices, contribute to the expected low - level oscillation of plastics [1] Futures and Spot Market Conditions - **Futures**: The plastics 2509 contract oscillated with reducing positions, closing at 7271 yuan/ton, down 0.27%. The trading volume decreased by 12,263 lots to 461,763 lots [2] - **Spot**: Most PE spot prices fell, with price changes ranging from - 200 to + 50 yuan/ton. LLDPE was quoted at 7260 - 7590 yuan/ton, LDPE at 9580 - 9830 yuan/ton, and HDPE at 7700 - 8100 yuan/ton [3] Fundamental Tracking - **Supply**: The restart of maintenance devices in Dushanzi Petrochemical and Tarim Petrochemical has increased the plastics operating rate to about 87%, reaching a neutral level [1][4] - **Demand**: As of the week of June 20, the downstream operating rate of PE decreased by 0.06 percentage points to 38.69%. Agricultural film entered the off - season, with a decline in orders and a slight increase in raw material inventory. Packaging film orders increased slightly, and the overall downstream operating rate was at a relatively low level compared to the same period in previous years [1][4] - **Inventory**: Petrochemical inventory decreased to 76.5 tons on Wednesday, 2.5 tons higher than the same period last year. It is at a neutral level compared to the same period in previous years [1][4] - **Raw Materials**: Brent crude oil 08 contract fell to $68/barrel. Northeast Asian ethylene prices remained flat at $860/ton, and Southeast Asian ethylene prices remained flat at $850/ton [4]

Group 1 - The main plastic futures contract experienced a rapid increase, reaching a peak of 7339.00 yuan, with a closing price of 7339.00 yuan, reflecting a rise of 2.66% [1] - Zhonghui Futures suggests a bearish outlook for plastic, citing an increase in supply with 2.08 million tons of new capacity from companies like Wanhua and the startup of Shandong New Era's facility [2] - Shenyin Wanguo Futures indicates that the short-term trend for plastic will continue to rebound and repair prices, supported by a recent rebound in international crude oil prices [3] Group 2 - The demand side shows a decline in agricultural film operating rates for four consecutive weeks, indicating weak demand [2] - The overall sentiment in the commodity market is positive due to the recent consensus reached during the China-US meeting, which may support plastic prices [3] - The recommendation from Zhonghui Futures is to gradually take profits on long positions and avoid chasing higher prices, while monitoring the price trends of crude oil and coal [2]