Group 1: Report Information - Report Title: Polyethylene Risk Management Daily Report [1] - Date: August 14, 2025 [1] Group 2: Analyst Information - Analysts: Dai Yifan (Investment Consulting License No.: Z0015428), Gu Hengye (Futures Practice License No.: F03143348) [2] - Investment Consulting Business Qualification: CSRC License [2011] No. 1290 [2] Group 3: Price Forecast and Hedging Strategies - Polyethylene Price Range Forecast (Monthly): 7200 - 7400 [3] - Current Volatility (20 - day rolling): 9.94% [3] - Current Volatility Historical Percentile (3 - year): 11.1% [3] - Inventory Management Strategy: For high - level finished product inventory, sell L2509 futures at 25% ratio in the range of 7350 - 7400 and sell L2510C7400 call options at 50% ratio in the range of 50 - 100 [3] - Procurement Management Strategy: For low - level procurement inventory, buy L2509 futures at 50% ratio in the range of 7200 - 7250 and sell L2510P7200 put options at 75% ratio in the range of 30 - 70 [3] Group 4: Core Contradictions - Polyolefin market follows macro - sentiment and coking coal price fluctuations. PE is moving towards a supply - demand growth pattern. Supply is increasing as the maintenance season ends, and demand is transitioning from off - season to peak season but with a slow recovery speed. Near - term PE supply - demand pressure is not large, but there is a risk of inventory accumulation if demand recovery is less than expected [4] Group 5: Bullish and Bearish Factors - Bullish Factor: Demand is expected to improve after August [5] - Bearish Factors: Jilin Petrochemical has recently started production, and ExxonMobil's 500,000 - ton LDPE plant is expected to start production in August - September. LLDPE inventory is at a high level [6] Group 6: Market Data Futures Prices and Spreads - Plastic Main Contract Basis: 8 yuan/ton on August 14, with a daily change of 26 yuan/ton and a weekly change of 30 yuan/ton [7] - L01 Contract Price: 7343 yuan/ton on August 14, a daily decrease of 38 yuan/ton and a weekly decrease of 21 yuan/ton [7] Spot Prices and Regional Spreads - North China Spot Price: 7290 yuan/ton on August 14, unchanged daily and an increase of 80 yuan/ton weekly [9] - East China Spot Price: 7360 yuan/ton on August 14, unchanged daily and an increase of 40 yuan/ton weekly [9] Upstream Prices and Processing Profits - Brent Crude Oil Price: 66 dollars/barrel on August 14, unchanged daily and a decrease of 0.8 dollars/barrel weekly [9] - US Ethane Price: 0.2026 dollars/gallon on August 14, a daily decrease of 0.0024 dollars/gallon and a weekly decrease of 0.0137 dollars/gallon [9]

Report Summary 1. Price Forecast and Volatility - The monthly price range forecast for polyethylene is 7100 - 7500, with a current 20 - day rolling volatility of 14.45% and a 3 - year historical percentile of 34.0% [2] 2. Hedging Strategies Inventory Management - When inventory is high and there are concerns about price drops, for inventory management: - Short L2509 futures at a 25% hedging ratio, with an entry range of 7350 - 7450 to prevent inventory depreciation and lock in profits [2] - Sell L2509C7400 call options at a 50% hedging ratio, with an entry range of 50 - 100 to collect premiums and lock in the selling price if prices rise [2] Procurement Management - When procurement inventory is low and aiming to lock in costs: - Buy L2509 futures at a 50% hedging ratio, with an entry range of 7100 - 7200 to prevent price increases and lock in procurement costs [2] - Sell L2509P7200 put options at a 75% hedging ratio, with an entry range of 40 - 80 to collect premiums and lock in the buying price if prices fall [2] 3. Core Views - Recently, the polyolefin market has been driven up by macro - sentiment and coking coal prices. From a fundamental perspective, PE also has upward momentum. Supply - side pressure has been marginally relieved, and demand has been higher than expected. If the high - demand growth rate continues in the second half of the year, PE supply and demand will be in a tight - balance state. Currently, the improvement in macro - sentiment and fundamentals is in resonance, giving PE short - term upward momentum [3] 4. Supply - Side Factors Positive Factors - PE plants are in a seasonal maintenance period, and the concentrated maintenance season is expected to last until mid - July [3] - Some full - density plants have switched production from LLDPE to HDPE due to the high HDPE - LLDPE price spread. Although HDPE supply has increased, its low inventory can absorb the additional supply, and LLDPE supply has decreased marginally [3] - The Iran - Israel conflict may lead to a slight reduction in PE imports from Iran in July - August [3][4] Negative Factors - Multiple HDPE plants are planned to be put into operation in the middle of the year [8] - The current spot price lacks strong support, making the real - world market weak [8] 5. Market Data Futures Prices and Spreads - The plastic main - contract basis on July 11, 2025, was 64 yuan/ton higher than the previous day and 18 yuan/ton lower than the previous week [6] - Details of L01, L05, L09 contract prices, month - to - month spreads, and L - P spreads are provided in the report [9] Spot Prices and Regional Spreads - Spot prices and regional spreads in North China, East China, and South China are presented, along with their daily and weekly changes [9] Non - standard and Standard Product Spreads - Spreads between various HDPE products and LLDPE film, as well as LDPE film and LLDPE film, are given, along with their changes [9] Upstream Prices and Processing Profits - Prices of Brent crude oil, US ethane, northwest coal, and East China methanol, as well as processing profits from different production methods (oil - based, coal - based, etc.) are provided, along with their changes [9]

1. Report Industry Investment Rating - Not provided 2. Core Viewpoints - The recent core contradiction of PE is that the weak supply - demand pattern restricts its upward space. On the supply side, although PE plants are in the centralized maintenance season with marginal supply reduction, the production is still much higher than the same period in previous years due to many new productions at the beginning of the year. On the demand side, the low - profit environment suppresses the operating rate, and the agricultural film is in the off - season, so there is no incremental demand driver [2]. - There are some positive factors, including PE plants entering the seasonal maintenance season which is expected to last until July, and the current futures price being at a relatively low level with limited downward space [3]. - There are also negative factors, such as the planned commissioning of multiple HDPE plants in the middle of the year, the reduction of domestic demand due to the off - season of downstream production and sales and the low - profit environment, and the continuous weakness of the plastic spot market with the basis in North China turning from positive to negative [4]. 3. Summary by Relevant Content 3.1 Price Forecast - The monthly price range forecast for polyethylene is 6900 - 7200 yuan/ton, the current 20 - day rolling volatility is 14.63%, and the historical percentile of the current volatility in the past 3 years is 34.7% [1]. 3.2 Hedging Strategies Inventory Management - When the inventory of finished products is high and there are concerns about falling plastic prices, for long - position inventory, it is recommended to short plastic futures (L2509) with a hedging ratio of 25% and enter the market at 7100 - 7150 yuan/ton to prevent inventory depreciation losses and lock in profits; also, sell call options (L2509C7200) with a hedging ratio of 50% and a premium range of 70 - 120 yuan to reduce costs and lock in the spot selling price if the polyethylene price rises [1]. Procurement Management - When the procurement of regular inventory is low and there is a need to purchase according to orders, for short - position inventory, it is recommended to buy plastic futures (L2509) with a hedging ratio of 50% and enter the market at 6900 - 7000 yuan/ton to prevent the increase in procurement costs due to rising polyethylene prices; also, sell put options (L2509P6900) with a hedging ratio of 75% and a premium range of 50 - 100 yuan to reduce procurement costs and lock in the spot purchase price if the polyethylene price falls [1]. 3.3 Market Data Futures Prices and Spreads - On June 6, 2025, the plastic main - contract basis was 119 yuan/ton, showing a daily decrease of 12 yuan/ton and a weekly decrease of 36 yuan/ton. The prices of L01, L05, and L09 contracts were 7037 yuan/ton, 7016 yuan/ton, and 7066 yuan/ton respectively, with daily increases of 32 yuan/ton, 24 yuan/ton, and 32 yuan/ton, and weekly increases of 52 yuan/ton, 26 yuan/ton, and 41 yuan/ton [5]. - The L1 - 5 month spread was 21 yuan/ton, showing a daily increase of 8 yuan/ton and a weekly increase of 26 yuan/ton; the L5 - 9 month spread was - 50 yuan/ton, showing a daily decrease of 8 yuan/ton and a weekly decrease of 15 yuan/ton; the L9 - 1 month spread was - 29 yuan/ton, with no daily change and a weekly increase of 11 yuan/ton [5]. - The L - P spread was 141 yuan/ton, showing a daily increase of 18 yuan/ton and a weekly increase of 34 yuan/ton [7]. Spot Prices and Regional Spreads - On June 6, 2025, the spot prices in North China, East China, and South China were 7030 yuan/ton, 7160 yuan/ton, and 7200 yuan/ton respectively. The prices in North China and East China remained unchanged compared with the previous day, while the price in South China increased by 30 yuan/ton. The weekly changes were - 30 yuan/ton, - 30 yuan/ton, and 20 yuan/ton respectively [7]. - The difference between East China and North China was 130 yuan/ton with no daily or weekly change; the difference between East China and South China was - 40 yuan/ton, showing a daily decrease of 30 yuan/ton and a weekly decrease of 50 yuan/ton [7]. Non - standard and Standard Product Spreads - The spreads between HDPE film, HDPE hollow, HDPE injection, HDPE drawing, HDPE pipe, LDPE film and LLDPE film all had certain daily and weekly changes on June 6, 2025, most of which showed a daily decrease of 20 yuan/ton [7]. Upstream Prices and Processing Profits - On June 6, 2025, the Brent crude oil price was 65 US dollars/barrel, the US ethane price was 0.2248 US dollars/gallon, the coal price in the Northwest was 475 yuan/ton, and the methanol price in East China was 2365 yuan/ton. The daily and weekly changes of these prices varied [7]. - The processing profits of oil - based PE, coal - based PE, externally - purchased methanol - based PE, externally - purchased ethane - based PE, and externally - purchased ethylene - based PE also had different daily and weekly changes [7].