1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The view on naphtha this week is that ethylene may oscillate to form a bottom, and naphtha will maintain a narrow - range oscillation. The supply of naphtha in the Middle East is expected to decline seasonally in the first quarter and gradually increase after February. Russian exports exceed expectations, and the subsequent export expectations are slightly adjusted upwards. The overall Asian supply is slightly reduced. The demand for naphtha in Asia has strengthened slightly, but the increase is limited. In the short - term, naphtha will continue to be in a game between Asian ethylene suppression and structural tightness, with limited downward space in the short - term, and the best upward situation in the medium - to - long - term has passed [5]. - For ethylene, although the monomer ethylene cracking is currently in a loss state, if downstream derivatives are included, most cracking units are no longer in a loss. The short - term trading of ethylene surplus is relatively sufficient, and subsequent trading may improve dynamically. The cost support remains relatively strong, and the weak reality of ethylene is expected to improve [5]. 3. Summary According to the Directory 3.1 Naphtha Part - **Price and Spot Summary**: The prices of Brent, MOPJ Premium, Japanese naphtha, and other related products have changed. The Asian ethylene cracking profit is - 33 dollars/ton (- 15 dollars/ton), and the Asian gasoline - naphtha is 17 dollars/ton (- 5 dollars/ton) [8]. - **Supply**: The March arbitrage arrival volume is expected to decrease significantly, leading to a supply shortage in the Asian market in the first and second half of March. Although the cracking unit operating load is low, naphtha cracking demand still exists due to better cash flow than LPG, and LPG has not yet formed a substitution pressure on naphtha [9]. - **Global Naphtha Spread Comparison**: This week, the gasoline cracking in Europe and the United States remained stable, the gasoline blending demand in Europe and the United States was weak, and the East - West spread oscillated. Asian naphtha oscillated in a narrow range, and there was no direct driver to close the East - West spread. The naphtha in the United States strengthened due to the demand for blending heavy oil, and the price centers in Europe and the United States increased [14]. - **Overseas Gasoline Situation**: The global gasoline cracking spread was weak this week and was basically at a year - on - year low. The gasoline inventories in Europe and the United States showed an inflection point, and the gasoline inventory in the United States remained at a historical high, with some pressure on the carry - over inventory before the 2026 peak season [16][22]. - **Gasoline - Naphtha Spread**: The near - end gasoline - naphtha spread was globally differentiated. The spread in Asia fell to a relatively low year - on - year position, while the spreads in Europe and the United States remained unchanged this week. The premium of heavy naphtha continued to rise [27]. - **Naphtha Downstream Price**: This week, the overall aromatic hydrocarbon prices continued to rise, the olefin end continued to be differentiated, propylene and butadiene continued to strengthen month - on - month, the ethylene end price was under pressure, and the monomer ethylene cracking profit loss increased [40]. - **Global Naphtha Cracking**: This week, the global naphtha cracking weakened month - on - month under the impact of crude oil, but downstream chemical products still provided profits, and the short - term downward space for naphtha was limited [42]. - **Global Cracking Profit**: This week, crude oil strengthened rapidly, the domestic ethylene stabilized, the US - dollar ethylene rebounded, the monomer ethylene cracking profit weakened again this week, and the propane feed profit weakened more significantly [48]. - **Asian Propane Situation**: This week, due to the cold wave in Europe and the United States, heavy fog in the United States, and potential risks in the Middle East situation, the propane price strengthened significantly, the Asian arrival cost was at a high level, and the downstream PDH operating rate weakened significantly to a low level [54]. - **Global Reforming Profit**: This week, the overall reforming profit declined, the Asian gasoline - type reforming profit continued to decline, the refinery profit pressure became more prominent, and the aromatic hydrocarbon reforming profit also declined this week. Currently, aromatic - type reforming is still a better choice for refineries [56]. - **Balance Sheet - Supply**: The supply from the Middle East is expected to decline seasonally in January and then gradually recover. Russian exports are expected to increase and then stabilize at around 750,000 tons per month. The arbitrage volume from Northwest Europe and Africa has decreased, while the arbitrage volume from the United States has increased [62]. - **Balance Sheet - Demand**: The import demand in China has increased month - on - month, and there may be an upward expectation in the future. The naphtha economy is similar to that of LPG this week, and the LPG substitution feed for Asian cracking units is expected to continue to decrease [81]. 3.2 Ethylene Part - **Global Ethylene Capacity Distribution**: In 2025, the growth of global ethylene cracking capacity was mainly concentrated in China, and the ethylene cracking capacity in other regions of the world remained basically unchanged [99]. - **Global Ethylene Logistics**: Asia is the main pricing area. Asian exports mainly come from Japan and South Korea, and Asian imports are mainly from China and Chinese Taipei. The North American route is from the United States to Northeast Asia and Southeast Asia, and the European route has regional imports and exports with a net export of 30,000 - 40,000 tons [101]. - **Ethylene Price and Spot Description**: The prices of Sinopec ethylene, CFR Northeast Asia ethylene, and other related products have changed. The ethylene cracking profit weakened this week, and the profit was all transferred to downstream derivatives [102][105]. - **Ethylene Arbitrage Window**: This week, the Asian US - dollar ethylene price remained stable, the domestic market rebounded slightly, the prices of derivatives continued to be strong, and most of them started to make profits. The Northeast Asia - US Gulf spread remained at a high level, and the arbitrage window was close to opening [105]. - **Ethylene Downstream Profit (External Procurement)**: This week, the domestic ethylene price remained stable month - on - month, the profits of domestic derivatives increased first and then decreased during the week. The styrene profit was at a five - year high, and the plastic profit recovered significantly this week [106]. - **Overseas Derivatives External Procurement Profit**: This week, the European ethylene price declined significantly, and the profits of downstream chemical products were compressed. In the United States, the profits of overall chemical products increased due to the cold wave [109]. - **Ethylene Balance Sheet - Supply**: In 2026, the main contradiction in Northeast Asia lies in the elimination of ethylene cracking units in Japan and South Korea, and the normal maintenance volume has increased. The maintenance plan in China is still relatively small [117]. - **Ethylene Domestic and Overseas Downstream Production**: The production time in 2026 is differentiated, and there is almost no production before September [119]. - **Ethylene Domestic Balance Sheet - Monthly**: This week, the upstream supply increased slightly, and the downstream demand decreased slightly. The ethylene supply - demand pressure was relieved but still in a state of surplus. In the future, the downstream operating rate is expected to increase under the support of profits, but the ethylene market is still relatively loose [123]. - **Ethylene Asian Balance Sheet**: The supply - demand situation in Asia has improved month - on - month, but ethylene is still in a state of surplus in the first half of 2026 [130]. 3.3 Olefin - Aromatic Hydrocarbon Impact - **Aromatic Hydrocarbon Relative Valuation**: This week, the valuation of aromatic hydrocarbons increased first and then decreased, and the overall valuation remained relatively high. The valuation of overseas aromatic hydrocarbons relative to gasoline weakened month - on - month, and the overseas gasoline price fell to a relatively low year - on - year position [135][136]. - **Global Octane Number**: The octane number in the United States changed little, and the octane number in Asia weakened month - on - month this week. The toluene price in Asia weakened from a high level, the disproportionation profit was compressed month - on - month, and the disproportionation profit in the United States remained at a high level [138]. - **Blending Oil Cost - Effectiveness**: The MTBE - toluene spread continued to decline this week, and the toluene valuation declined. The MX - toluene spread continued to weaken to a year - on - year low, indicating that the aromatic hydrocarbon market is still in a state of surplus [146]. - **South Korean Production and Inventory**: In November, the overall output of South Korean refineries decreased, and the aromatic hydrocarbon inventory decreased month - on - month [147].