Summary of Key Points from Conference Call Records Industry Overview - The white liquor industry is currently in a bottoming phase, with 2026 designated as a year for price stabilization, shifting focus towards C-end operations and repurchase cultivation [1][2][3] - The liquor market is experiencing a transition from competition for traffic to user operation and repurchase cultivation, with leading companies focusing on precise connections at main venues [2][3] Key Insights on White Liquor - Moutai's price has stabilized at 1,600 RMB, showing double-digit growth during the Spring Festival, while Wuliangye plans to maintain prices above 800 RMB in Q2 [1][2] - The white liquor sector is expected to see improved forecasts after financial report pressures are released by the end of April [1] - Inventory reduction and channel profit changes will be key focuses in the first half of 2026, with companies that adjust first likely to see marginal improvements in the second half [2][3] Performance of Major Brands - **Moutai**: Expected annual growth rate of 7.5% during the 14th Five-Year Plan, with a controlled sales volume providing a solid price floor [2] - **Wuliangye**: Achieved double-digit growth during the 2026 Spring Festival compared to 2024, with plans to reduce volume and tighten channel policies to push prices back up [4] - **Luzhou Laojiao**: Adopted a price maintenance strategy, with a decline in high-end product sales but stable low-end product performance [4] - **Fenjiu**: Experienced better-than-expected sales during the Spring Festival, with a focus on mid-range products showing resilience [5] Market Dynamics and Investment Strategies - The overall market sentiment among distributors is calm, with expectations of weak sales being accepted [3] - The investment strategy for the white liquor sector suggests continued pressure in March and April, with potential for recovery post-financial report disclosures [2][9] - Key recommended stocks include Moutai and Wuliangye, with Fenjiu also being highlighted for its potential rebound [10] Other Beverage and Food Industry Insights - The dairy sector is seeing a recovery in demand, with moderate price increases benefiting leading companies like Yili and Mengniu [1][13] - The restaurant supply chain is benefiting from improved demand, with companies like Haitian and Yihai showing double-digit growth in early 2026 [1][12] - The beer sector remains stable, with Yanjing Beer showing growth driven by its U8 product [10][11] Conclusion - The white liquor industry is on the verge of recovery, with key players like Moutai and Wuliangye positioned to benefit from price stabilization and improved market conditions in 2026 [9][10] - The overall investment landscape in the beverage and food sectors is promising, with specific focus on companies that can adapt to changing consumer demands and market conditions [12][20]

Investment Rating - The report maintains a recommendation for the industry, indicating a positive outlook for the sector as it is expected to outperform the benchmark index [4]. Core Insights - The white liquor sector is in a bottoming phase, with a focus on cost transmission in the consumer goods segment. The industry is shifting from channel competition to consumer engagement and cultivation [8][26]. - The report highlights that 2026 will be a critical year for the industry, with an emphasis on inventory reduction and channel profit recovery in the first half, while the second half will see a transition towards consumer-centric strategies [9][19]. Summary by Sections Overall Feedback from Spring Sugar 2026 - The Spring Sugar event saw fewer participating companies and personnel compared to previous years, with major brands like Moutai and Wuliangye canceling events, indicating a shift in focus towards consumer operations and brand value [8][9]. - The white liquor sector is experiencing increased differentiation in sales performance, with stable pricing and cautious but calm sentiments among distributors. The expectation is for a stabilization year in 2026, with a focus on inventory management and profit recovery [10][11]. White Liquor Sector - Sales performance is showing signs of differentiation, with Moutai stabilizing and Wuliangye expected to follow suit. The overall sentiment is that the sector is still in a bottoming process, with a focus on inventory reduction and profit recovery [10][12]. - The report anticipates that 2026 will be a year of price stabilization, with major brands not setting aggressive sales targets, leading to improved cash flow for distributors [10][19]. Consumer Goods Sector - The report notes improvements in the restaurant chain sector, slight growth in dairy products, and continued stability in beverages and snacks. Key players in the restaurant chain are expected to see operational improvements in Q1 2026 [11][12]. - Dairy product companies like Mengniu and Yili are projected to experience single-digit growth in shipments, while beverage leaders like Nongfu Spring are expected to maintain robust growth [12][19]. Investment Recommendations - The report suggests focusing on cyclical improvements in the restaurant chain sector, recommending companies such as Haitian Flavoring and Yihai International. It also highlights the potential for recovery in the dairy sector with companies like Yili and Mengniu [26]. - In the beverage sector, Nongfu Spring is recommended due to its strong performance and favorable valuation outlook for 2026 [26]. Company-Specific Feedback - Wuliangye is expected to stabilize in 2026, with a focus on inventory management and pricing strategies. The company has seen significant growth in sales compared to previous years [13][19]. - Moutai's pricing strategy and inventory management are expected to support its market position, with a focus on maintaining stable prices and improving distributor confidence [19][22].

Company and Industry Summary Company Overview - The company operates in the artificial turf industry, focusing on leisure grass and simulation plant businesses. It has experienced significant growth and is adjusting its pricing strategy due to rising raw material costs. Key Points Industry Dynamics - The artificial turf industry is experiencing a strong demand growth, with global penetration rates for leisure grass at only 3%-5%, indicating substantial room for expansion. The industry sales growth rate is expected to maintain between 10%-20% annually [2][21][22]. Financial Performance - In the first two months of 2026, the company achieved double-digit revenue growth compared to the same period in 2025. The company anticipates that order and shipment growth in the first half of 2026 will outperform the same period in 2025 [2][8]. - The company has initiated a price adjustment mechanism in response to a more than 10% increase in raw material costs due to oil price fluctuations. New orders will reflect these price changes starting from late March 2026 [2][4]. Cost Management - The company’s raw material inventory turnover is approximately 1.5 months, and the markup for leisure grass products at the end-user level is around 2 to 3 times [5]. - There is a lag effect in cost transmission, which is expected to impact the gross margin in Q2 2026. However, the company believes that the price adjustments will mitigate most of this impact [6][8]. Capacity and Production - The company is adjusting its capacity layout, with a new 40 million square meter facility in Vietnam expected to start production in Q4 2025. The utilization rate for this facility in 2026 is projected to be between 30%-50% [2][12]. - The company has decided to terminate its factory plans in Mexico due to high production costs, which are estimated to be 30%-50% higher than in Vietnam [2][13]. Currency and Tariff Impacts - Tariffs on exports from China and Vietnam to the U.S. have decreased by 10 percentage points, which has a minimal impact on the company's profits due to the FOB pricing model [2][10]. - The company has faced some foreign exchange losses due to a 3%-4% appreciation of the RMB, but it has adjusted its USD pricing to hedge against these losses [2][10]. Business Diversification - The simulation plant business has a compound annual growth rate of over 30%, outpacing the core turf business. The sports turf segment is also benefiting from increased demand driven by sporting events, contributing approximately 25% to total revenue [2][24]. Capital Expenditure and Shareholder Returns - The company is entering a stable period for capital expenditures, with no major investment projects planned for 2026-2027. It aims to maintain a 50% dividend payout ratio [3][16][17]. Competitive Landscape - The competitive landscape remains stable, with the primary competition coming from Chinese companies. The company’s market share is expected to continue increasing [2][23]. Future Outlook - The company is optimistic about the growth of the sports turf market, particularly due to upcoming international sporting events in 2026. However, the overall contribution of the sports turf segment to total revenue is limited, accounting for about 25% [19]. - The company plans to explore new capacity expansions beyond Vietnam in the future, considering other Southeast Asian countries and regions [14]. Conclusion - The company is well-positioned in the artificial turf industry, with strong growth prospects driven by increasing demand and strategic adjustments in pricing and capacity. The focus on cost management and diversification into simulation plants further enhances its competitive edge.

- The report utilizes the input-output table data to quantify the cost structure and cost transmission capabilities of various industries, focusing on the intermediate product quadrant, which represents the demand of each economic sector for products from other sectors. The cost distribution weight for a sector is calculated by dividing the column data of the input-output table by the total input minus operating surplus for that sector[12][13][16] - A regression model is employed to measure the cost transmission capability of industries. The estimated cost and product price (PPI) series are regressed, with the regression slope serving as a proxy for cost transmission capability. To account for inventory buffering effects, the optimal lag period is determined by calculating the time-lagged correlation coefficient between cost and price series, and regression is performed at the optimal lag[16][17][18] - The cost transmission capability coefficients reveal that upstream industries such as oil, coal, and iron ore exhibit strong cost transmission capabilities due to low cost elasticity and high product price elasticity. Midstream industries like steel and chemicals also demonstrate strong cost transmission capabilities, often exceeding 1, indicating that price increases in upstream resources do not harm their profitability. In contrast, downstream industries generally have weaker cost transmission capabilities, often below 1, making them more vulnerable to raw material price increases[18][19] - The report quantifies the profit margin changes across industries under the impact of a 50% increase in oil prices. Industries with rigid downstream pricing and direct exposure to energy costs, such as gas production and supply, suffer the most. Other significantly affected industries include non-metallic mineral mining, rubber and plastic products, and printing. However, industries like chemical manufacturing and chemical fiber manufacturing benefit from strong cost transmission capabilities, which mitigate the impact of rising oil prices on their profit margins[19][20] - The average inventory turnover months of industries are calculated using industrial enterprise revenue and inventory data. The analysis finds a positive correlation between inventory turnover months and the lag in product price changes relative to cost increases. Industries with higher inventory turnover months have greater "buffering capacity," allowing them to delay price increases and absorb cost pressures for longer periods[23][24][26]

Core Viewpoint - The current oil price shock will not lead China into a "stagflation" scenario; improved inflation expectations will help catalyze the upward cycle of inventory, and the global energy transition and production security will accelerate capital goods exports from China, presenting opportunities in manufacturing and cyclical industries [6] Group 1: Impact of High Oil Prices on the Industry Chain - High oil prices affect the economic inflation center and rhythm significantly, primarily through industrial production and consumer prices [8] - The cost impact of high oil prices is most pronounced in transportation, chemicals, electricity, and construction, with the ability to transmit costs ranked as upstream > downstream > midstream [10] - High oil prices promote manufacturing price increases and inventory replenishment, with the petrochemical chain being the most benefited [17][19] Group 2: Review of Oil Price Shock Impact on A-shares - The oil price shocks from 2010-2012 and 2021-2022 had diverse impacts on A-shares, with four main mechanisms identified: 1) Rising oil prices boost resource prices and inventory replenishment, benefiting the oil chain and its substitutes [24] 2) Sustained high oil prices increase costs for oil-dependent industries, eroding profits [24] 3) Rising oil prices suppress export demand due to increased global manufacturing costs [24] 4) High oil prices trigger monetary tightening, negatively impacting stock market risk appetite [24] Group 3: Review of the 2010-2012 Oil Price Shock - During the 2010-2012 oil shock, the profitability of cyclical industries was negatively impacted by rising costs, particularly during high oil price plateau periods [27] - The manufacturing sector's profitability was less affected, with stable net profit margins in the machinery and electrical equipment sectors [29] - The consumer and technology sectors were generally less impacted by oil price shocks, although some downstream sectors like agriculture and textiles experienced declines [32][44] Group 4: Review of the 2021-2022 Oil Price Shock - The oil price shock during the 2021-2022 period had limited impact on the supply side, with oil prices rising initially but then declining significantly [40] - The cyclical industries showed resilience, with net profit margins remaining stable despite initial pressures from rising costs [41] - The consumer and technology sectors maintained low sensitivity to oil prices, although some sectors like agriculture and textiles faced challenges [44][49] Group 5: Industry Recommendations - Industries recommended for investment include petrochemicals, coal, and agricultural chemicals, which benefit from price differentials due to rising oil prices [4] - Capital goods sectors such as power equipment, new energy vehicles, and engineering machinery are expected to benefit from global energy transition and production security demands [4] - Industries likely to see inventory replenishment driven by price expectations include construction materials, steel, and chemicals [4]

1. Report Industry Investment Ratings - No industry investment ratings are provided in the report. 2. Core Views of the Report - The report provides daily analysis and forecasts for various energy and chemical futures, including rubber, synthetic rubber, LLDPE, PP, etc. It indicates that most commodities are in a state of wide - range oscillation, high - level oscillation, or interval operation, and the market is significantly affected by geopolitical factors [2]. - For example, short - term price fluctuations of some commodities are affected by the decline of international night - market energy prices, but the domestic fundamentals provide support for the downside space [10][33][36]. - The impact of geopolitical conflicts on the supply and demand of commodities is a key factor, such as the impact of the conflict in the Middle East on the shipping of raw materials and the production and export of products [13][71]. 3. Summary According to Relevant Catalogs Rubber - **Market Trend**: Wide - range oscillation [2][4] - **Fundamental Data**: The closing price of the rubber main contract increased, the trading volume decreased, the open interest decreased, and the basis and some price differences changed [4]. - **Industry News**: From January to February 2026, the cumulative export volume of truck and bus tires increased year - on - year, but the export price decreased. The export regions were significantly differentiated, with a shift towards emerging markets. It is expected that the export volume of all - steel tires in March will decline [5][6][7]. Synthetic Rubber - **Market Trend**: Wide - range oscillation due to repeated geopolitical situations [2][8] - **Fundamental Data**: The closing price of the cis - butadiene rubber main contract decreased, the trading volume increased, the open interest decreased, and the basis and price differences changed [8]. - **Industry News**: As of March 18, 2026, the inventory of domestic cis - butadiene rubber sample enterprises decreased. It is expected that the price of synthetic rubber will oscillate widely in the short term [8][10]. LLDPE and PP - **Market Trend**: LLDPE's start - up continues to decline, and cost transmission is not smooth; PP's C3 raw materials fluctuate greatly, and the spot price follows the increase slowly [2][12] - **Fundamental Data**: The closing prices of LLDPE and PP futures decreased, the trading volume and open interest decreased, and the basis and price differences changed [12]. - **Market Analysis**: Geopolitical factors lead to the strengthening of raw materials, and the cost of LLDPE increases. The demand for LLDPE's post - holiday mulch film is in line with the season, and the start - up of packaging film has recovered, but cost transmission takes time. For PP, the cost is strongly supported, and the demand has improved, but the PDH profit is at a low level [13]. Caustic Soda - **Market Trend**: Wide - range oscillation [2][16] - **Fundamental Data**: The 05 - contract futures price, the price of the cheapest deliverable 32 - alkali in Shandong, and the basis are provided [16]. - **Market Analysis**: The caustic soda futures premium is large, and the 04 - contract is about to be delivered, which will suppress the market. In the long - term, the situation in the Middle East will affect the supply and demand of caustic soda. The market may oscillate widely in the short term [18]. Pulp - **Market Trend**: Oscillatory operation [2][21] - **Fundamental Data**: The closing price of the pulp main contract increased during the day and decreased at night, the trading volume increased, the open interest decreased, and the basis and price differences changed [23]. - **Industry News**: The pulp futures price increased slightly, but the market trading was light, and the downstream paper mills' purchasing enthusiasm was not high. The price of household paper is expected to be stable [24][25]. Glass - **Market Trend**: The price of the original sheet is stable [26] - **Fundamental Data**: The closing price of the glass futures decreased, the trading volume decreased, the open interest decreased, and the basis and price differences changed [27]. - **Market News**: The price of the domestic float glass market shows a trend of falling in the north and rising in the south, but the overall fluctuation range is limited, and the market trading is average [27]. Methanol - **Market Trend**: Wide - range oscillation [2][29] - **Fundamental Data**: The closing price of the methanol main contract decreased, the trading volume decreased, the open interest decreased, and the basis and price differences changed [30]. - **Market News**: The methanol spot price index increased, and the port inventory decreased. It is expected that the methanol price will oscillate widely in the short term [32][33]. Urea - **Market Trend**: Interval operation [2][35] - **Fundamental Data**: The closing price of the urea main contract decreased, the trading volume decreased, the open interest decreased, and the basis and price differences changed [36]. - **Industry News**: As of March 18, 2026, the total inventory of Chinese urea enterprises decreased. It is expected that the urea price will operate within an interval in the short term [36][38]. Styrene - **Market Trend**: High - level oscillation [2][39] - **Fundamental Data**: The prices of styrene futures contracts decreased, and the price differences and profits changed [39]. - **Market News**: Pure benzene and styrene are in high - level oscillation. The conflict has affected the supply and demand of pure benzene and styrene, and the port inventory may decrease [40]. Soda Ash - **Market Trend**: The spot market changes little [2][45] - **Fundamental Data**: The closing price of the soda ash futures increased slightly, the trading volume decreased, the open interest decreased, and the basis and price differences changed [47]. - **Market News**: The domestic soda ash market is stable and oscillating, the enterprise equipment is operating stably, the downstream demand is average, and the price is expected to be stable [47]. LPG and Propylene - **Market Trend**: LPG has geopolitical risks and frequent supply disturbances; propylene's supply is expected to decrease due to geopolitical impacts on the cost side [2][49] - **Fundamental Data**: The closing prices of LPG and propylene futures decreased, the trading volume and open interest changed, and the spot prices and price differences changed [49]. - **Market News**: The prices of CP paper goods increased, and there are many domestic PDH and LPG plant maintenance plans [54][55]. PVC - **Market Trend**: Wide - range oscillation [2][57] - **Fundamental Data**: The 05 - contract futures price, the spot price in East China, the basis, and the 5 - 9 month spread are provided [57]. - **Market Analysis**: The geopolitical conflict in the Middle East affects the supply of PVC, and the domestic ethylene - based PVC production has decreased. The short - term basis converges, and the market is supported in the long - term [57]. Fuel Oil and Low - Sulfur Fuel Oil - **Market Trend**: Fuel oil continues to be weak, and short - term fluctuations continue to increase; low - sulfur fuel oil drops significantly, and the price difference between high - and low - sulfur in the overseas spot market continues to decline [2][59] - **Fundamental Data**: The closing prices of fuel oil and low - sulfur fuel oil futures decreased, the trading volume and open interest changed, and the spot prices and price differences changed [59]. Container Shipping Index (European Line) - **Market Trend**: The oscillation center may move down, and attention should be paid to geopolitical disturbances [2][61] - **Fundamental Data**: The closing prices of container shipping index futures contracts changed, and the freight rates and shipping schedules of different carriers are provided [61][67]. - **Market Analysis**: The market is affected by geopolitical emotions. The supply and demand of shipping capacity and the change of freight rates are analyzed, and the short - term and long - term trends of the market are predicted [71][72][75]. Short - Fiber and Bottle Chip - **Market Trend**: High - level fluctuations due to repeated geopolitical situations [2][78] - **Fundamental Data**: The prices of short - fiber and bottle - chip futures contracts decreased, and the basis, trading volume, open interest, and other data changed [78]. - **Market News**: The short - fiber futures price dropped, the spot price was stable or slightly decreased, and the sales rate was 52%. The bottle - chip factory price was mostly decreased, and the market trading atmosphere was average [78][79]. Pure Benzene - **Market Trend**: High - level oscillation [2][81] - **Fundamental Data**: The prices of pure benzene futures contracts decreased, and the price differences and inventory data changed [81]. - **Market News**: The pure benzene port inventory decreased, and the market trading was weak [82][83].

Report Overview - The report focuses on the fundamentals and market conditions of LLDPE and PP in the polyolefin industry [1][2] 1. Report Industry Investment Rating - Not provided 2. Core Viewpoints - For LLDPE,开工 continues to decline, cost transmission is poor, and raw material prices are expected to be strong due to geopolitical factors, while supply and demand factors such as production and inventory need attention [1][2] - For PP, C3 raw material prices fluctuate greatly, spot price increases are slow, cost support is strong, and attention should be paid to the marginal changes of cracking and PDH devices under deep - loss PDH profits [1][2] 3. Summary by Directory 3.1 Fundamental Tracking - **LLDPE (L2605)**: The closing price yesterday was 8918, with a daily decline of 6.35%, trading volume of 1530549, and a decrease of 58310 in positions. The 05 - contract basis was - 318 (compared to - 573 the previous day), and the 05 - 09 contract spread was 182 (compared to 211 the previous day). Spot prices in North China, East China, and South China were 8600, 8700, and 8900 yuan/ton respectively, all lower than the previous day [1] - **PP (PP2605)**: The closing price yesterday was 9114, with a daily decline of 6.93%, trading volume of 1745058, and a decrease of 59592 in positions. The 05 - contract basis was - 114 (compared to - 493 the previous day), and the 05 - 09 contract spread was 334 (compared to 499 the previous day). Spot prices in North China, East China, and South China were 9000, 9000, and 9300 yuan/ton respectively, all lower than the previous day [1] 3.2 Spot News - **LLDPE**: PE Exxon LL and Tarim HD are under maintenance, and the operating rate has dropped to 76% (a 10% drop compared to early March), with the standard product production ratio remaining low. Foreign naphtha plants have announced maintenance plans from late March to April, and the PE operating rate may drop to around 70% in the future [1] - **PP**: Zhejiang Petrochemical's second - line PP is under maintenance, and the PP operating rate has dropped to 70%. There are still many planned PDH maintenance, and PDH profits have reached a new low. The basis remains weak, and cost transmission is poor [1] 3.3 Market Condition Analysis - **LLDPE**: Geopolitical tensions are escalating, shipping in the Strait of Hormuz is stagnant, and raw materials such as naphtha are expected to be strong, increasing PE costs. After the festival, the demand for mulch film is in line with the season, and the operating rate of packaging film has rebounded, but cost transmission takes time. On the supply side, BASF Zhanjiang has started mass production, and the planned maintenance and production reduction in March are increasing, the standard product production ratio is decreasing, and inventory is starting to be depleted [2] - **PP**: C3 is affected by supply disturbances from Saudi Arabia and Iran, with strong cost support, and PDH maintenance remains high. There is no new production before the 2605 contract on the supply side, and the game between existing supply and demand intensifies. On the demand side, downstream enterprises have resumed work intensively, and demand has improved month - on - month. PDH profits remain low, and multiple PDH plants in South China have not resumed operation after maintenance. Under deep - loss PDH profits, attention should be paid to the marginal changes of cracking and PDH devices [2] 3.4 Trend Intensity - LLDPE trend intensity: 1; PP trend intensity: 1 [4]

Report Summary 1. Report Industry Investment Rating - Not provided in the given content 2. Core Viewpoints - For LLDPE, derivatives reduction continues to materialize, and cost transmission is poor. PE cost is rising due to geopolitical factors affecting raw materials, and supply - side changes such as production cuts and reduced standard product production are occurring, with attention on geopolitical persistence and cost transmission [1][2]. - For PP, C3 raw materials have strong support, but spot price increases are slow. Cost support is strong due to supply disturbances, and there is a high level of PDH maintenance. The game between existing supply and demand intensifies, and attention should be paid to the marginal changes of cracking and PDH devices [1][2]. 3. Summary by Relevant Catalogs 3.1 Fundamental Tracking - **Futures Data**: For L2605, the closing price was 9523, with a daily increase of 8.00%, trading volume of 1195591, and a position change of 36927. For PP2605, the closing price was 9793, with a daily increase of 8.58%, trading volume of 1294173, and a position change of 37873. The 05 - contract basis for L2605 was - 573 (previous day - 418), and for PP2605 was - 493 (previous day - 319). The 05 - 09 contract spread for L2605 was 211 (previous day 214), and for PP2605 was 499 (previous day 433) [1]. - **Spot Price**: In the North, the LLDPE spot price was 8950 yuan/ton (previous day 8400), and PP was 9300 yuan/ton (previous day 8650). In the East, LLDPE was 9200 yuan/ton (previous day 8500), and PP was 9300 yuan/ton (previous day 8700). In the South, LLDPE was 9200 yuan/ton (previous day 8600), and PP was 9600 yuan/ton (previous day 8850) [1]. 3.2 Spot News - For PE, Maoming Petrochemical's full - density production stopped over the weekend, with the operating rate dropping to 78%, and standard product production remaining low. External naphtha - using devices plan to reduce production and conduct maintenance from late March to April, and the PE operating rate may drop to around 70%. For PP, South Korea - China and Zhenhai's PP production stopped, and Juzhengyuan restarted with externally sourced propylene. The PP operating rate remained at 71%, and there are still many PDH maintenance plans, with PDH profits hitting new lows. The basis continued to weaken, cost transmission was poor, and the US dollar price increased by 20 - 30 dollars [1]. 3.3 Market Condition Analysis - **LLDPE**: Geopolitical tensions are escalating, causing shipping disruptions in the Strait of Hormuz and affecting logistics. Naphtha and other raw materials are expected to be strong, raising PE costs. After the holiday, the demand for mulch film is in line with the season, and the operating rate of packaging film has increased, but cost transmission takes time. On the supply side, BASF Zhanjiang has started mass production, and there are increasing maintenance and production - reduction plans in March, with standard product production decreasing and inventory starting to decline [2]. - **PP**: C3 is affected by supply disturbances from Saudi Arabia and Iran, with strong cost support, and PDH maintenance remains high. There is no new production before the 2605 contract, and the game between existing supply and demand intensifies. On the demand side, downstream industries have resumed work intensively, and demand has improved month - on - month. PDH profits remain low, and many PDH devices in South China have not resumed operation after maintenance. Attention should be paid to the marginal changes of cracking and PDH devices [2]. 3.4 Futures Research - The trend strength of LLDPE is 1, and that of PP is 1 [4]

Report Industry Investment Rating - Not provided in the given content Core Viewpoints - For LLDPE, the cracking supply is shrinking and cost transmission is poor. For PP, the supply is limited, exports are favorable, and the risk - free window for futures and spot has opened [1]. - Geopolitical situation is escalating, affecting the shipping in the Strait of Hormuz, which is expected to strengthen raw materials like naphtha, raising the cost of PE. The demand for mulch film after the festival is in line with the season, and the packaging film production has recovered, but cost transmission takes time. For PP, C3 is affected by supply disruptions from Saudi Arabia and Iran, with strong cost support, and PDH maintenance is still high [2]. - The supply - demand game for PP has intensified. The downstream has resumed work intensively, and the demand has improved month - on - month. The PDH profit remains at a low level, and multiple PDH units in South China are still under maintenance. Attention should be paid to the marginal changes of cracking and PDH units [3]. Summary According to Relevant Catalogs Fundamental Tracking - **LLDPE (L2605)**: The closing price yesterday was 8818, with a daily decline of 1.10%. The trading volume was 1103490, and the open interest decreased by 20434. The 05 - contract basis was - 418 (compared to - 516 the previous day), and the 05 - 09 contract spread was 214 (compared to 235 the previous day). The spot prices in North, East, and South China were 8400, 8500, and 8600 yuan/ton respectively, with the South China price dropping from 8700 yuan/ton the previous day [1]. - **PP (PP2605)**: The closing price yesterday was 9019, with a daily decline of 1.52%. The trading volume was 1310098, and the open interest decreased by 29253. The 05 - contract basis was - 319 (compared to - 388 the previous day), and the 05 - 09 contract spread was 433 (compared to 513 the previous day). The spot prices in North, East, and South China were 8650, 8700, and 8850 yuan/ton respectively, with the North and East China prices dropping from 8750 and 8770 yuan/ton the previous day [1]. Spot News - For polyolefins, the PE external naphtha units have begun to give concentrated maintenance plans from late March to April, and the PE operating rate may drop below 70%. Zhongsha and Zhongying HD stopped production today. Zhenhai PP stopped production, and the PP operating rate dropped below 70% again. There are still many planned PDH maintenance, and the PDH profit has reached a new low. The basis has continued to weaken, cost transmission is poor, downstream terminals have not accepted the order price adjustment, manufacturers have lowered the ex - factory price, and the North China delivery window has continued to open [1]. Market Condition Analysis - **PE**: Geopolitical situation is escalating, shipping in the Strait of Hormuz is stagnant, and raw materials like naphtha are expected to be strong, raising the cost of PE. After the festival, the demand for mulch film is in line with the season, and the packaging film production has recovered, but cost transmission takes time. On the supply side, BASF Zhanjiang has achieved mass production, the planned maintenance and production reduction in March are increasing, the production of standard products has declined, and inventory has started to be depleted. Attention should be paid to the geopolitical persistence and cost transmission [2]. - **PP**: C3 is affected by supply disruptions from Saudi Arabia and Iran, with strong cost support, and PDH maintenance is still high. There is no new production before the 2605 contract, and the supply - demand game for existing suppliers has intensified. The downstream has resumed work intensively, and the demand has improved month - on - month. The PDH profit remains at a low level, multiple PDH units in South China are still under maintenance. Attention should be paid to the marginal changes of cracking and PDH units [2][3]. Trend Intensity - The trend intensity of LLDPE is 1, and the trend intensity of PP is 1 [3]

Investment Rating - The report maintains an "Outperform" rating for the construction materials sector [2] Core Views - The continuous rise in crude oil prices has significantly impacted the cost structure of various segments within the construction materials industry, leading to increased pressure on companies to pass on these costs to consumers [7][17] - The report highlights that leading companies in the waterproofing and architectural coatings sectors have demonstrated the ability and willingness to raise prices in response to rising costs, indicating an improved competitive landscape [27][31] Summary by Sections 1. Impact of Rising Crude Oil Prices on Construction Materials - Crude oil prices have surged, with Brent crude reaching $117.45 per barrel, marking a 65.1% increase since March [7][17] - The waterproofing industry is particularly affected, with key raw materials like asphalt and polyether seeing price increases of 34% and 36% respectively, leading to a cost impact of 7.5% to 11.2% on companies [21][24] - In the architectural coatings sector, the main raw material, emulsion, has also seen significant price hikes, contributing to an overall cost increase of 8.6% [28][33] - The plastic pipe industry has experienced raw material price increases of 28% for PVC and 19% for PPR, resulting in a cost impact of approximately 20% and 13.7% respectively [34][36] - The float glass industry has faced rising costs due to increased prices of fuel oil and petroleum coke, with production costs exceeding those of natural gas [10][40] 2. Market Review - The construction materials sector has seen a decline of 6.86%, underperforming the CSI 300 index by 4.7 percentage points [41][43] - The cement and glass sectors both reported a 7.3% decline, while the fiberglass sector saw a 10.6% drop [41][42]