1. Report Industry Investment Rating - No information provided in the report 2. Core View of the Report - The LLDPE and PP markets are expected to show a volatile trend today. The supply exceeds demand in the fundamentals, but the recent strengthening of propane prices has driven the market. The industrial inventory is neutral, and the downstream demand has weakened or is average [4][6] 3. Summary by Relevant Catalogs LLDPE Overview - **Fundamentals**: In October, the official PMI was 49, a decrease of 0.8 percentage points from the previous month, and the manufacturing prosperity declined. OPEC+ decided to maintain the production plan set in early November at the November 30 meeting, with an increase of 137,000 barrels per day in December and a suspension of the production increase plan from January to March 2026. The recent strengthening of propane prices has driven the price of polyolefins. The demand for agricultural films is gradually declining, and the demand for packaging films is mainly based on rigid needs, with some areas improving. The current spot price of LLDPE delivery products is 6,770 (unchanged), and the overall fundamentals are bearish [4] - **Basis**: The basis of the LLDPE 2601 contract is -19, with a premium - discount ratio of - 0.3%, which is neutral [4] - **Inventory**: The comprehensive PE inventory is 501,000 tons (-53,000 tons), which is bearish [4] - **Disk**: The 20 - day moving average of the LLDPE main contract is downward, and the closing price is below the 20 - day line, which is bearish [4] - **Main Position**: The net long position of the LLDPE main contract is increasing, which is bullish [4] - **Expectation**: The LLDPE main contract is expected to fluctuate today, with oversupply in the fundamentals, the strengthening of propane prices driving the market, neutral industrial inventory, and a decline in downstream demand [4] - **Likely Factors**: Cost support [5] - **Negative Factors**: Weak downstream demand compared to the same period last year and more new capacity put into operation in the fourth quarter [5] - **Main Logic**: Oversupply and domestic macro - policies [5] PP Overview - **Fundamentals**: In October, the official PMI was 49, a decrease of 0.8 percentage points from the previous month, and the manufacturing prosperity declined. OPEC+ decided to maintain the production plan set in early November at the November 30 meeting, with an increase of 137,000 barrels per day in December and a suspension of the production increase plan from January to March 2026. The recent strengthening of propane prices has led the PDH profit to reach a low in recent years, driving the price of polyolefins up. The seasonal demand for plastic weaving is declining, and the overall situation is average, while the demand for pipes is acceptable. The current spot price of PP delivery products is 6,380 (+30), and the overall fundamentals are bearish [6] - **Basis**: The basis of the PP 2601 contract is -29, with a premium - discount ratio of - 0.5%, which is neutral [6] - **Inventory**: The comprehensive PP inventory is 546,000 tons (-48,000 tons), which is neutral [6] - **Disk**: The 20 - day moving average of the PP main contract is downward, and the closing price is below the 20 - day line, which is bearish [6] - **Main Position**: The net short position of the PP main contract is decreasing, which is still bearish [6] - **Expectation**: The PP main contract is expected to fluctuate today, with oversupply in the fundamentals, the strengthening of propane prices driving the market, neutral industrial inventory, and average downstream demand [6] - **Likely Factors**: Cost support and the rise of PDH [7] - **Negative Factors**: Weak downstream demand compared to the same period last year and more new capacity put into operation in the fourth quarter [7] - **Main Logic**: Oversupply and domestic macro - policies [7] Supply - Demand Balance Sheet - **Polyethylene**: From 2018 to 2024, the production capacity, output, net import volume, apparent consumption, and actual consumption of polyethylene have shown certain trends of change. The production capacity growth rate in 2025E is expected to be 20.5% [13] - **Polypropylene**: From 2018 to 2024, the production capacity, output, net import volume, apparent consumption, and actual consumption of polypropylene have also shown corresponding trends of change. The production capacity growth rate in 2025E is expected to be 11.0% [15]

1. Report Industry Investment Rating - Not provided in the content 2. Core Viewpoints of the Report - The successful convening of the Politburo meeting led to the realization of short - term macro - positive expectations, and the counter - arbitrage market of chemical products reached a phased bottom. Currently, the crude oil price has rebounded strongly from a low level. With the supply pressure on the polyolefin 09 contract not yet falsified, short - term polyolefins may fluctuate strongly following the cost side [15][16]. 3. Summary by Directory 3.1. Weekly Assessment and Strategy Recommendation - Policy: The Politburo meeting was successfully held, and short - term macro - positive expectations were realized, with the counter - arbitrage market of chemical products reaching a phased bottom [15]. - Valuation: For polyethylene, the weekly increase was (futures > cost > spot); for polypropylene, it was (futures > spot > cost) [15]. - Cost: Last week, WTI crude oil rose 7.28%, Brent crude oil rose 6.90%, coal price rose 1.23%, methanol fell - 2.21%, ethylene rose 0.61%, propylene fell - 0.40%, and propane remained unchanged at 0.00%. There was still support on the cost side [15]. - Supply: PE capacity utilization was 79.82%, down - 0.55% month - on - month, - 0.20% year - on - year, and - 6.44% compared with the 5 - year average. PP capacity utilization was 76.46%, down - 0.16% month - on - month, up 1.41% year - on - year, and - 13.64% compared with the 5 - year average. In August, the polyethylene capacity release pressure was large [15]. - Import and Export: In June, domestic PE imports were 95.93 tons, down - 10.19% from May and - 4.63% year - on - year. PP imports were 15.36 tons, down - 8.22% from May and - 15.78% year - on - year. PE exports were 9.68 tons, down - 7.95% from May but up 48.84% year - on - year. PP exports were 20.94 tons, down - 24.29% from May but up 39.35% year - on - year. The 40% transit tariff imposed by the US on Vietnam may hinder PP exports [15]. - Demand: PE downstream operating rate was 38.30%, down - 0.31% month - on - month and - 5.78% year - on - year. PP downstream operating rate was 48.45%, down - 0.14% month - on - month and - 0.37% year - on - year. Agricultural film orders may increase seasonally [15]. - Inventory: PE production enterprise inventory was 43.28 tons, with a destocking of - 13.94% month - on - month and a stockpiling of 0.84% compared with the same period last year; PE trader inventory was 5.78 tons, with a destocking of - 3.36% month - on - month. PP production enterprise inventory was 56.48 tons, with a destocking of - 2.72% month - on - month and a stockpiling of 18.46% compared with the same period last year; PP trader inventory was 17.33 tons, with a stockpiling of 4.02% month - on - month; PP port inventory was 6.24 tons, with a destocking of - 7.14% month - on - month [15]. - Forecast: For polyethylene (LL2509), the reference oscillation range is (7200 - 7500); for polypropylene (PP2509), it is (7000 - 7300). - Strategy: Continue to hold the LL9 - 1 counter - arbitrage position for profit - taking [15]. 3.2. Spot - Futures Market - In August, there are many polyethylene production plans, and the LL - PP price difference may shrink [65]. 3.3. Cost Side - Oil - based costs have increased significantly. Last week, WTI crude oil rose 7.28%, Brent crude oil rose 6.90%, coal price rose 1.23%, methanol fell - 2.21%, ethylene rose 0.61%, propylene fell - 0.40%, and propane remained unchanged at 0.00% [15]. - The supply of LPG: The gross profit of major refineries has been continuously decreasing, and the increase in the operating rate has slowed down [98]. - The arrival volume of LPG: In July, the shipping volume rebounded, and the supply from the Middle East continued to increase [118]. 3.4. Polyethylene Supply Side - Raw material proportion: Oil - based accounts for 62.00%, light - hydrocarbon - based accounts for 19.00%, coal - based accounts for 15.00%, methanol accounts for 3.00%, and purchased ethylene accounts for 1.00% [151]. - Capacity and production: In 2025, 353 tons of polyethylene capacity have been put into production, and 150 tons are yet to be put into production. Some production plans have been postponed [157]. - Capacity utilization: PE capacity utilization was 79.82%, down - 0.55% month - on - month, - 0.20% year - on - year, and - 6.44% compared with the 5 - year average [15].