Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The ongoing turmoil in the Middle East, especially the tense situation in Iran, continues to drive up the prices of energy and chemical products. The market anticipates that the conflict in Iran will escalate and may spread to neighboring countries, leading to concerns about energy supply disruptions [3]. - For PE, upstream maintenance plans are increasing, and the expected decline in the operating rate, combined with weak import resource arrivals, is tightening the market supply. Although the overall downstream operating rate has rebounded, the high - price acceptance of downstream is low, resulting in a significant decline in the L basis. However, the supply side still provides strong support, and the PE market trend remains strong [3]. - For PP, the intensification of the Iran conflict has increased concerns about raw material supply. The supply support for PP remains strong as the maintenance losses of upstream enterprises continue to rise. The high price of PP has squeezed downstream profits, leading to cautious procurement by downstream. However, the opening of the PP export window has boosted export demand. In the short term, the reduction in PP supply and the strong support from the cost side of propane will continue to drive prices up as long as the Strait of Hormuz remains closed [4]. Summary by Directory 1. Polyolefin Basis and Inter - period Structure - The closing price of the L main contract is 9,523 yuan/ton (+705), and the closing price of the PP main contract is 9,793 yuan/ton (+774). The LL North China spot price is 8,800 yuan/ton (+500), the LL East China spot price is 9,100 yuan/ton (+650), and the PP East China spot price is 9,300 yuan/ton (+550). The LL North China basis is - 723 yuan/ton (-205), the LL East China basis is - 423 yuan/ton (-55), and the PP East China basis is - 493 yuan/ton (-224) [1]. 2. Production Profit and Operating Rate - The PE operating rate is 80.1% (-2.3%), and the PP operating rate is 70.5% (+0.4%). The PE oil - based production profit is - 1,617.9 yuan/ton (-412.0), the PP oil - based production profit is - 1,557.9 yuan/ton (-412.0), and the PDH - based PP production profit is - 3,142.4 yuan/ton (-1,202.8) [1]. 3. Polyolefin Non - standard Price Difference No specific data or analysis provided in the given content. 4. Polyolefin Import and Export Profits - The LL import profit is - 962.5 yuan/ton (-150.0), the PP import profit is - 1,409.9 yuan/ton (-200.0), and the PP export profit is 179.1 US dollars/ton (+25.7) [1]. 5. Polyolefin Downstream Operating Rate and Downstream Profits - The PE downstream agricultural film operating rate is 35.4% (+8.6%), the PE downstream packaging film operating rate is 45.6% (+2.2%), the PP downstream plastic weaving operating rate is 40.3% (-0.3%), and the PP downstream BOPP film operating rate is 62.0% (+0.6%) [2]. 6. Polyolefin Inventory No specific data or analysis provided in the given content. Strategies - Unilateral: Cautiously go long on LLDPE and PP for hedging. - Inter - period: No strategy provided. - Cross - variety: Cautiously go short on the spread between LL05 and PP05 [5].

Report Industry Investment Rating - Not provided in the given content Core Viewpoints of the Report - The market trends of L plastic and PP polypropylene are affected by multiple factors including production, inventory, international oil prices, geopolitical situations, and economic indices [1][2][5] Summary According to Relevant Catalogs Market Situation - L plastic: The price trends of L plastic vary daily, with some days showing increases and others showing decreases or sideways movements The trading volume and downstream purchasing attitudes also change accordingly [1][5][8] - PP polypropylene: Similar to L plastic, the price of PP polypropylene fluctuates, and the market sentiment is influenced by factors like geopolitical events and production cost changes [1][5][12] Important Information - Logistics industry: The ratio of China's total social logistics cost to GDP dropped to 13.9% in 2025, and the logistics industry is undergoing a digital and intelligent transformation [1] - Chemical industry: In 2026, the total production capacity of the domestic polyethylene market will exceed 4500 tons, and the industry will face structural adjustments The chemical M&A market is expected to recover slightly in 2026 [8][16] - International events: The military conflict between the US, Israel, and Iran has affected the international oil price and the PP market [12][16][20] Logical Analysis - Macroeconomic indicators: Various economic indicators such as the global stock market capitalization, the China Logistics Prosperity Index, the US economic policy uncertainty index, and the dollar index have different impacts on commodities and the chemical industry [2][6][9] - Production and inventory: The production and inventory levels of LLDPE and PP, including daily output, weekly and monthly maintenance losses, and port and warehouse inventories, also affect the market trends [2][6][9] Trading Strategies - Unilateral trading: For most days, the report suggests holding long positions for the L 2605 contract and the PP 2605 contract, with appropriate stop - loss levels set [2][7][9] - Arbitrage trading: The report often suggests holding short positions for the SPC L2605&PP2605 contract, with stop - loss levels adjusted according to market conditions [2][7][9] - Options trading: The report generally advises to wait and see [2][7][9]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The current market trading core has shifted from the fundamental aspects of polyolefins to the cost and sentiment logic driven by geopolitics. If the situation in the Strait of Hormuz remains tense or further escalates, polyolefin prices will gain phased upward momentum, but the sustainability of the geopolitical risk premium is uncertain, and the market is volatile [19]. - The pulp market is expected to undergo low - level wide - range shock adjustments in the short term, as the high inventory at ports still needs to be consumed, despite the gradually increasing trading volume in the downstream market [56]. - The soda ash market is in a pattern of high supply, high inventory, and weak demand. Although there is short - term support from macro - sentiment improvement and energy price increases, the medium - term supply - demand imbalance will continue. In the short term, the rebound may strengthen, but in the long - term, there is downward pressure on prices [100][120]. - The glass market is in a game between "strong expectations" and "weak reality". In the short term, there may be opportunities for a rebound, but the upward space is limited. In the long - term, the improvement of real estate sales data is crucial for the upward movement of glass prices [122]. 3. Summary by Directory Polyolefins 3.1. Market Review and Operation Suggestions - **Market Review**: In the futures market, the plastic main - continuous contract rose 16.58% from 6630 to 7691, and the polypropylene main - continuous contract rose 17.94% from 6680 to 7800. In the spot market, prices of various polyolefin products increased, with LLDPE rising 10.53% - 17.14%, LDPE rising 17.37% - 28.09%, etc. [7] - **Market Outlook**: Geopolitical conflicts in the Strait of Hormuz have affected polyolefins. On one hand, it impacts upstream energy costs, and on the other hand, it affects direct imports, with PE being more affected than PP. If the situation in the Strait of Hormuz remains tense, polyolefin prices will gain upward momentum, but due to the uncertainty of geopolitical risk premiums, it is recommended to adopt a wait - and - see or shock - based approach [19]. 3.2. Fundamental Changes - **Petrochemical Maintenance Statistics**: Polypropylene production decreased by 1.18 tons compared to last week, a 1.54% decline, and the average capacity utilization rate decreased by 1.16%. Polyethylene production decreased by 0.87 tons, and the capacity utilization rate decreased by 1.04%. The maintenance loss of polyethylene increased by 0.62 tons [21][22]. - **Production Profit**: Coal - based polyolefin production had positive profits, with coal - made PE having an average gross profit of 400.22 yuan/ton, an increase of 66.37 yuan/ton. Oil - made polyolefin production was in a loss state, with oil - made PE's loss expanding to - 905.18 yuan/ton. PDH - made PP's cost increased, and the profit decreased [25][26][27]. - **Petrochemical Inventory Changes**: After the Spring Festival in 2026, the inventory of the two major oil companies reached 940,000 tons, and as of March 6, it was 820,000 tons. The commercial inventory of polypropylene and polyethylene increased significantly after the festival, and the de - stocking inflection point may occur around mid - March [33]. - **Downstream Operating Levels**: The operating levels of PE and PP downstream industries generally improved. For PE, the operating rate of agricultural film increased by 17 percentage points to 45%, and for PP, the operating rate of plastic weaving products increased by 6 percentage points to 43% [39][40]. Pulp 3.1. Pulp Market Review and Outlook - **Market Review**: As of Thursday, the pulp 05 contract closed at 5250 yuan/ton, a 0.34% decline from last week. The average prices of imported pulp varieties mostly decreased [55]. - **Market Outlook**: In the short term, the pulp market will mainly undergo low - level wide - range shock adjustments due to high port inventories and limited demand [56]. 3.2. Fundamental Changes - **Pulp Shipment Volumes from Major Producing Countries**: In December, the shipment volume of coniferous pulp from 20 major pulp - producing countries increased by 14.8% month - on - month but decreased by 2.3% year - on - year; the shipment volume of broad - leaf pulp increased by 14.9% month - on - month but decreased by 0.9% year - on - year [57]. - **Pulp Import Volumes**: In December, China's pulp import volume was 3.11 million tons, a 4.2% month - on - month and 3.9% year - on - year decrease [65]. - **Pulp Inventory Situation**: As of the end of December, the inventory days of global producers' coniferous pulp increased by 1.6% month - on - month and 20.6% year - on - year; the inventory days of broad - leaf pulp decreased by 12.4% month - on - month and 4.7% year - on - year. As of the end of February, the weekly pulp inventory in major regions and ports increased by about [72]. - **Downstream Market**: The prices of downstream base paper were mostly stable, with only a slight increase in the average price of cultural paper. The market was in a wait - and - see state, and demand growth was limited [56]. Soda Ash 3.1. Market Review and Operation Suggestions - **Market Review**: This week, the main soda ash contract (SA605) first oscillated at the bottom and then rose, with a weekly increase of 4.02%. On March 6, the position was 1.1448 million lots, with a daily increase of 30,588 lots [96]. - **Operation Suggestions**: In the short term, the soda ash market may have a stronger rebound. If it can stabilize above 1200 points and break through further, the upward range will be opened. In the long - term, due to weak fundamentals, there is downward pressure on prices [100][101]. 3.2. Soda Ash Market Situation - **Soda Ash Supply**: The comprehensive capacity utilization rate of China's soda ash was 86.77% this week, a 1.73% increase. The weekly output increased to 807,000 tons, a 2.03% increase. Although some factories were under maintenance, the overall supply remained high [102]. - **Soda Ash Inventory**: As of March 5, the inventory of Chinese soda ash enterprises was 1.9472 million tons, a 2.79% increase. The inventory continued to rise to a historical high, but the growth rate slowed down [112]. - **Soda Ash Spot**: The spot price of soda ash remained stable this week, with only a slight increase in the national average price. The basis narrowed or turned negative, and the cost increase provided some support [116]. - **Soda Ash Downstream**: The demand for soda ash was mainly rigid, with limited recovery in downstream demand. The demand for float glass and photovoltaic glass was weak, and the recovery of light - soda downstream was slow [119]. Glass 3.1. Market Review and Operation Suggestions - **Market Review**: This week, the main glass contract (SA605) first declined and then rose, with a 2.35% increase to 1087 yuan/ton, and the 09 - 05 positive spread widened to 212 yuan/ton [121]. - **Operation Suggestions**: In the short term, there may be opportunities for a rebound, but the upward space is limited. In the long - term, the improvement of real estate sales data is crucial for the upward movement of glass prices [122]. 3.2. Glass Market Situation - **Glass Supply**: As of March 5, the operating rate of the float glass industry was 71.19%, a 0.92% increase. The weekly output was 1.0397 million tons, a 0.17% increase. The overall supply was at a low level, and the net change in production capacity was small [125]. - **Glass Inventory**: This week, the total inventory of national float glass sample enterprises was 79.637 million weight boxes, a 4.77% increase, and the inventory pressure increased significantly [127]. - **Glass Spot**: The spot price of float glass remained stable at a low level, with small regional fluctuations. The price was restricted by high inventory and weak demand, and the downward space was limited [130]. - **Glass Import and Export**: In December 2025, China's float glass import volume was 14,600 tons, a 5.59% decrease, and the export volume was 87,000 tons, a 2.59% increase [136]. - **Glass Upstream**: The soda ash industry had high supply and high inventory, with an increase in production and a rise in inventory. The industry was in an over - supply pattern, and there was downward pressure on prices [137]. - **Downstream Consumption**: The operating rate of LOW - E glass sample enterprises increased by 4.7 percentage points to 29.3%. The order days of glass deep - processing enterprises decreased month - on - month but increased year - on - year. The production and sales of the automotive industry decreased year - on - year, and the real estate industry's completion and sales areas decreased year - on - year [141][143][147].

1. Report Industry Investment Ratings - Positive: LPG, Fuel Oil, Low - Sulfur Fuel Oil, Propylene (LPG and Propylene are mentioned together, and Fuel Oil and Low - Sulfur Fuel Oil are also related) [47][57] - Negative: LLDPE, PP, Caustic Soda, Glass, PVC, Soda Ash [17][20][25][32][55][45] - Neutral: PX, PTA, MEG, Rubber, Synthetic Rubber, Pulp, Methanol, Urea, Styrene, Short - fiber, Bottle - chip, Offset Printing Paper, Pure Benzene, Container Freight Index (Europe Line) [7][8][9][12][28][38][41][42][77][80][85] 2. Core Views - The report analyzes the market conditions of various energy and chemical futures on January 22, 2026, including factors such as supply - demand, price trends, and geopolitical impacts. For example, the tension in the Iran situation affects the oil price, which in turn impacts PX and other related products. The market trends of different products are affected by factors such as production capacity, inventory, and downstream demand [6][7] 3. Summary by Related Catalogs PX, PTA, MEG - **PX**: Expected to open higher due to the impact of the US - Iran conflict on oil prices. The supply is loose, and the downstream PTA device maintenance leads to a gradual increase in supply. It is recommended to pay attention to hedging operations such as long PX short PTA [7] - **PTA**: The valuation is supported by the rebound of oil prices. It is recommended to focus on reducing processing fees. The future supply - demand is weak, and it turns into a state of inventory accumulation [8] - **MEG**: The valuation below 3600 has support, showing a range - bound market. The port inventory accumulation pressure increases, and the supply is still relatively high [8] Rubber - The rubber market is in a state of shock operation. The inventory in Qingdao has increased, and the downstream production and sales are under pressure. The total supply is shrinking, and the cost support is strengthening [9][11] Synthetic Rubber - The butadiene price stabilizes, and the futures price rebounds. The inventory of domestic cis - butadiene rubber has increased, and the butadiene port inventory has decreased significantly [12][13] LLDPE - In December, the import exceeded expectations, and the upstream quotation loosened. The supply pressure exists in the medium - term due to high production capacity and weakening demand [15][16] PP - The production scheduling remains at a low level, and the profit repair is limited. The cost is high, the demand is weak, and attention should be paid to the marginal changes of PDH devices [18][19] Caustic Soda - The price continues to decline due to cost reduction and supply - demand collapse. There is a pressure to reduce inventory before the Spring Festival, and the far - month contract may face cost increase and supply reduction [22][23] Pulp - The pulp market is in a state of shock operation. The demand is weak, the port inventory pressure exists, and it is recommended to pay attention to factors such as the stability of the futures market and the downstream procurement willingness [28][29] Glass - The price of glass original sheets is stable. The market trading atmosphere is not strong, and the downstream procurement demand is limited [32] Methanol - The methanol market is expected to be in a shock operation. The inventory in ports has increased slightly, and the cost provides certain support [37][38] Urea - The urea market is in a state of shock adjustment with support at the bottom. The enterprise inventory has decreased, and the price is expected to be stable in the short - term and strong in the medium - term [39][40][41] Styrene - The styrene market shows a strong - shock trend. The export exceeds expectations, the downstream replenishment cycle starts, and the market rebounds [42][43] Soda Ash - The spot market of soda ash changes little. The supply is at a high level, and the downstream demand is average [45] LPG, Propylene - The LPG market is supported by heating demand, and the PG trend is strong. The propylene spot maintains a tight balance [47] PVC - The PVC market is in a weak - shock state. The supply is sufficient, the demand is in the off - season, and the high - production and high - inventory structure is difficult to change in the short - term [54][55] Fuel Oil, Low - Sulfur Fuel Oil - The fuel oil market is short - term strong with increasing fluctuations. The low - sulfur fuel oil mainly follows the upward trend, and the price difference between high - and low - sulfur in the overseas spot market continues to shrink [57] Container Freight Index (Europe Line) - The container freight index (Europe Line) is in a temporary shock market. The impact of geopolitical factors, supply - demand changes, and policy adjustments on the market should be considered [59][70][71][72] Short - fiber, Bottle - chip - Both the short - fiber and bottle - chip markets are in a short - term shock state. The short - fiber processing fee is at a low level, and the bottle - chip market has a certain trading atmosphere [77][78] Offset Printing Paper - The offset printing paper market is recommended to be on the sidelines. The price is stable, the new orders in the market are limited, and the dealer inventory reduction is slow [80][81] Pure Benzene - The pure benzene market shows a strong - shock trend. The port inventory has decreased, and the market transaction is good due to the impact of the unexpected shutdown of related factories [85][86]

Core Viewpoint - The polyethylene (PE) industry in China is experiencing explosive capacity growth driven by integrated refining strategies, the rise of private refining, and foreign investment, leading to a supply-demand imbalance characterized by "overcapacity, structural imbalance, and regional concentration" [2][15]. Group 1: Domestic Polyethylene Supply Status - China's polyethylene capacity has expanded significantly, with a total capacity expected to reach 41.14 million tons per year by the end of 2025, marking a 15 percentage point increase in growth rate compared to 2024 [3][16]. - The market structure has shifted from being dominated by state-owned enterprises to a more diversified competition, with private companies accounting for 58% of new capacity in 2025 [4][17]. - The import dependency of polyethylene has decreased, with total imports dropping by 50.36 thousand tons in the first eleven months of 2025, leading to a reduction in import dependency to 28% [4][19]. Group 2: Raw Material Diversification - The raw material structure for polyethylene has evolved into a triad of oil-based, coal-based, and light hydrocarbon-based processes, with oil-based polyethylene accounting for nearly two-thirds of production [5][20]. - Coal-based polyethylene has seen rapid development since 2016, with a production capacity concentrated in coal-rich regions, benefiting from lower costs compared to oil-based processes [6][21]. - The light hydrocarbon-based route is emerging as a significant growth area, although it faces challenges due to reliance on imported feedstock [6][22]. Group 3: Regional Distribution and Structural Optimization - Polyethylene production is concentrated in four major regions: South China, North China, East China, and Northwest China, which together account for over 95% of total capacity [8][23]. - The uneven distribution of capacity has led to supply-demand mismatches, with overcapacity in the Northwest and high demand in South and East China [9][24]. - The market is transitioning to a more efficient logistics model that combines local production and consumption, moving away from traditional transportation methods [8][23]. Group 4: Future Outlook for Polyethylene Supply - The polyethylene industry is expected to continue its capacity expansion cycle from 2026 to 2030, with an anticipated addition of over 500 thousand tons in 2026 alone [10][11]. - The focus will shift from quantity to quality, with an emphasis on high-end products to fill existing supply gaps, particularly in LDPE and specialty grades [12][27]. - The maturation of the polyethylene futures market will enhance its role in stabilizing supply and guiding industry development, providing better risk management tools for companies [13][28].

1. Report Industry Investment Rating - Not provided in the report 2. Core Views Plastic Part - The supply is expected to increase in January, with some production shifting back to standard products. The futures and spot markets may not continue to resonate. The market supply - demand pattern is not optimistic, and prices are under pressure. It is recommended to take a short - position on rebounds in the single - side trading, and not recommend cross - period and cross - variety trading for now [5] Polypropylene Part - The valuation has increased, leading some devices to return. The PDH has concentrated maintenance in the first quarter. The market supply - demand pattern is not optimistic, and prices are expected to fluctuate. It is also recommended to take a short - position on rebounds in the single - side trading, and not recommend cross - period and cross - variety trading for now [82][84] 3. Summary by Directory Plastic Part Price & Spread - Futures prices, spot prices, and various price spreads have changed. The basis has strengthened, and the 5 - 9 month spread has strengthened. The import window has been repaired, and the non - standard price spread has changed. The overall profit has been repaired, with significant recent repairs in ethane and externally - purchased ethylene profits [9][13][23][34] Supply - From the end of 2024 to the first half of 2025, the production capacity base has increased, with a significant increase in total supply. The current maintenance plan in Q1 is not yet available, and the supply is expected to remain loose. The import volume may remain relatively high at the end of the year and the beginning of the next year [38][40][49] Demand & Inventory - The overall downstream demand is showing signs of decline. The inventory has shifted from the upstream to the mid - stream, but the mid - stream inventory reduction has been slow [59][65][77] Polypropylene Part Price & Spread - Futures and spot prices, as well as various price spreads, have fluctuated. The basis has strengthened slightly, and the month - spread has fluctuated. The import window is approaching to open, and the non - standard price spread has changed. The overall profit is compressed [88][93][100][120] Supply - From the end of 2024 to the middle of 2025, the production capacity has increased significantly. The start - up rate has declined recently, and the maintenance volume is higher than the same period last year. The subsequent maintenance scale is considerable, and the supply is expected to decrease [128][129][140] Demand & Inventory - The downstream demand is mixed. The inventory has shifted from the upstream to the mid - stream, and the oil - based inventory has been significantly reduced [153][160][166]

Report Overview - Report Title: Polyolefin Weekly Report [1] - Report Date: January 11, 2026 [2] - Analyst: Zhou Fuqiang [2] Investment Rating The report does not mention the industry investment rating. Core Views PE - The supply of PE is expected to remain relatively loose in the future, with increased imports at the end of 2025 and the beginning of 2026. The demand from downstream industries such as agricultural films and packaging films is in a seasonal off - peak period, and the market supply - demand pattern is not optimistic. The price is under pressure before the Spring Festival [5][6]. - The cost - side support for PE is average, and the inventory de - stocking is not smooth. The market is in a pattern of increasing supply and decreasing demand, and the price is expected to fluctuate, with a suggestion of shorting on rebounds [6]. PP - In the off - season, the PP price is under pressure. The supply center has declined recently, and the Q1 PDH device maintenance plan has increased. The import and export volumes are expected to remain at a basic level in the short term [92]. - The downstream demand is mixed, with some industries showing weakening demand and others having certain support. The overall inventory de - stocking is not smooth, and the market supply - demand pattern is not optimistic. It is recommended to short on rebounds [93][94]. Summary by Directory PE Section Price & Spread - The futures price of PE has shown a strong and volatile trend, with the basis remaining stable, and the 5 - 9 month spread strengthening to - 31. The production profit of different processes has different degrees of change, with the oil - based profit at - 520 (+30), and the coal - based at - 80(+70) [6]. - The domestic and overseas prices and spreads of PE have changed, with the Chinese arrival price increasing by 10 - 30 dollars, and the import window gradually opening [15][24]. Supply - In 2025, the total effective capacity growth rate of PE was 16%, and the domestic production growth rate was 18%. The overall start - up rate was 83.7% (+0.4%). Although there were some maintenance and production conversions, the supply was still relatively high [6]. - The import of PE is expected to increase at the end of 2025 and the beginning of 2026, and the new order imports are relatively cautious [6]. Demand & Inventory - The demand from downstream industries such as agricultural films and packaging films is in a seasonal off - peak period, with the agricultural film start - up rate decreasing and the demand for raw materials expected to decrease [6]. - The inventory de - stocking of PE is not smooth, with the social inventory de - stocking slowing down, and attention should be paid to whether the inventory can be transferred downstream [6]. PP Section Price & Spread - The basis of PP is weakly volatile, and the month spread is weakening. The production profit of different processes is under pressure, with the oil - based profit at - 1300 (+10), and the coal - based at - 220(-50) [94]. - The Chinese arrival price of PP has rebounded, and the import window is tending to open, but the export profit to Southeast Asia has limited increase [108]. Supply - In 2025, the total effective capacity growth rate of PP was 12.7%, and the annual production growth rate was 16.7%. The Q1 PDH device maintenance plan has increased, and the supply center has declined [92]. - The PP import volume is expected to be limited in the short term, and the export volume is also restricted by factors such as freight and overseas demand, and is expected to remain at a basic level [92]. Demand & Inventory - The downstream start - up rate of PP has declined, but the demand for some industries such as BOPP films is relatively good. The overall inventory de - stocking is not smooth, and the inventory is relatively high compared to the same period [93][94].

Report Industry Investment Rating No information provided in the content. Core Viewpoints of the Report - In 2026, the cost - side support for polyethylene is weak, and the supply - and - demand sides are under significant pressure. The market will fluctuate weakly with large upward pressure, mainly fluctuating in the bottom range in the short term. In the long term, attention can be paid to the structural opportunities brought by high - end production capacity and emerging demand [4][44]. - The cost support is expected to be limited. Crude oil supply is in global surplus with slowing demand growth, and coal supply - demand remains loose with weak and stable prices. Oil and coal provide insufficient cost support for polyethylene, and attention should be paid to the phased disturbances of macro and geopolitical factors on oil and coal prices [3][43]. - The supply pressure of polyethylene is expected to increase. In 2026, domestic polyethylene will continue to expand production, with planned new capacity exceeding 7 million tons and total capacity expected to reach 45 million tons. The proportion of high - pressure and high - end devices will increase. Import is expected to continue to shrink, and the industry focuses on high - performance competition [3][43]. - There is an expectation of slow recovery in demand. Domestic PE demand will gradually pick up, with short - and long - term trends diverging and uncertainties remaining. Stable - growth policies and consumption improvement will support demand, but overseas trade disturbances may restrict exports [3][43]. - There is uncertainty in the alleviation of inventory pressure in the industrial chain. The core variables are the release rhythm of previous production capacity and the strength of demand recovery. If demand does not improve and new capacity is released, inventory may remain high; if demand recovers due to policy stimulation, the pressure is expected to ease [3][44]. Summary by Relevant Catalogs 1. 2025 Polyethylene Market Review - **First stage (January 2 - May 30)**: The market was in a game between supply and demand with wide fluctuations. Supply was loose throughout the period, and demand was persistently weak. The overall supply - and - demand situation led to a downward price movement first and then a fluctuating bottom - building, with strong wait - and - see sentiment [6]. - **Second stage (June 3 - August 26)**: The market entered a game between cost support and supply pressure, showing a trend of fluctuating and stabilizing. Cost support from rising crude oil prices and high - level supply coexisted. Downstream demand was divided. The market price was difficult to break through upwards, and the upward rebound power was insufficient [7]. - **Third stage (August 27 - December 31)**: The imbalance between supply and demand intensified, and the market accelerated to the bottom. Supply was stable with new capacity continuously released, and demand was weak. The cost support was weak, and the price dropped to the annual low and then fluctuated at the bottom [8]. 2. Cost - Profit: Limited Support from Oil and Coal, Losses in Dual - Process Profits - **Expected loose supply - and - demand of oil and coal, cost - side under pressure**: In 2025, the crude oil market was in supply - demand surplus with a "high - then - low" price trend and a lower price center. In 2026, the supply - demand surplus pressure will still be large, and the price center will move down. The coking coal market in 2025 had a "V - shaped" price trend, and in 2026, it is expected to remain in a loose supply - demand balance with a low - level operation [11][13]. - **Differentiated dual - process profits, weak cost support awaiting a turnaround**: In 2025, the profitability of coal - based and oil - based LLDPE was significantly different. By the end of the year, both were in a loss state, which suppressed the production enthusiasm of enterprises. In 2026, the raw material cost of polyethylene may move down, but geopolitical and domestic coal price factors may cause disturbances [15][16]. 3. Supply Side: High Pressure from New Domestic Investments, Import May Continue to Shrink - **Continued expansion cycle, pay attention to the realization of new investment capacity**: From 2020 - 2026, it is an expansion cycle for the domestic polyethylene industry. In 2025, the design capacity reached 41.14 million tons, a year - on - year increase of 15.206%. In 2026, the planned new capacity is expected to exceed 7 million tons, and the total capacity may reach 45 million tons, which will intensify competition but also promote product structure upgrading [18][20]. - **Overhaul and expansion go hand in hand, the pressure of abundant market supply in 2026 is difficult to ease**: In 2025, the overhaul loss of polyethylene increased, and the production increased. In 2026, about 5 million tons of new capacity will be put into production, and the supply - side will continue to expand, with intensified competition for general grades and an upgraded supply structure [24][25]. - **Weak recovery of import profit, polyethylene import may continue to shrink**: Since the fourth quarter of 2024 to the first half of 2025, new domestic polyethylene plants were put into operation, squeezing imports. In 2025, the import profit declined, and the import volume decreased. In 2026, imports may continue to shrink, depending on domestic supply and import profit recovery [29][31]. 4. Demand Side: There is Still Room for Policy to Take Effect, Demand is Expected to Recover Slowly - **Mild bottom - building and recovery, waiting for the resonance of policy and demand**: In 2025, the domestic economy was in a mild bottom - building and recovery stage, with a slow recovery of internal and external demand. In 2026, domestic demand for plastic products is expected to gradually pick up, but the growth will be moderate due to external uncertainties [33][35]. - **Low downstream start - up, short - term pressure in 2026 awaiting recovery**: In 2025, the downstream start - up of polyethylene decreased year - on - year, and the demand growth was limited. In the long term, emerging industries will create new demand for polyethylene. In the short term, the weak demand pattern may continue until the first half of 2026 [37][39]. 5. Inventory Side: Inventory Center Moves Up, Uncertainty Remains in Pressure Alleviation - In 2025, the overall inventory in the industrial chain was loose, and the inventory center was higher than in previous years. In 2026, there is uncertainty in the alleviation of inventory pressure, which depends on the release rhythm of production capacity and the strength of demand recovery [41].

1. Report Industry Investment Rating No relevant content provided. 2. Core Views of the Report Plastic Part - The price of plastics is under pressure due to abundant supply. The total effective capacity growth rate is 16%, and the domestic production volume growth rate is 18% in the first half of the year. Although imports have declined year - on - year, the ample supply still suppresses prices. The overall market situation is not optimistic, with a pattern of increasing supply and decreasing demand before the Spring Festival [5]. - The strategy suggests a short - position allocation on rebounds for single - side trading. Cross - period and cross - variety trading are not recommended for now [5]. Polypropylene Part - Polypropylene prices are under pressure in the off - season. The total effective capacity growth rate is 12.7%, and the estimated annual output growth rate is 16.7%. The market is expected to enter a pattern of increasing supply and decreasing demand in Q4, with an unfavorable supply - demand situation [95]. - Similar to plastics, the strategy recommends a short - position allocation on rebounds for single - side trading. Cross - period and cross - variety trading are also not recommended currently [97]. 3. Summaries Based on Relevant Catalogs Plastic Part Price & Spread - The basis has weakened significantly as the spot price increases less than the futures price. The 5 - 9 month spread has strengthened to - 31, and the warehouse receipts remain at a high level [5]. - The import window has improved, and the LD import profit is at a relatively high level within the year. The non - standard price spread shows that the HD film supply is tight, and the LD has weakened recently [29][32]. Supply - New capacity has been concentratedly put into operation from the end of 2024 to the first half of 2025, with a nominal capacity growth rate of 19.2% and an effective capacity growth rate of 16.7%. The supply is expected to remain abundant, with a slight decline in the short term and an increase in the future [47]. - The overall inventory removal is not smooth, and the inventory has been transferred to the middle - stream. The subsequent supply increase and weak downstream confidence may lead to a slowdown in social inventory removal [5]. Demand & Inventory - The demand for downstream industries such as agricultural films and packaging films has entered a phased off - season. The overall downstream demand shows signs of decline, and the raw material demand is expected to decrease [5]. - The inventory transfer to the middle - stream is not smooth, and the downstream's lack of confidence in the future market has led to a slowdown in social inventory removal [5]. Polypropylene Part Price & Spread - The basis has weakened as the futures price rebounds, and the warehouse receipts have increased again. The cross - period spread is fluctuating [97]. - The import window is approaching closure, and the export profit to Southeast Asia has limited growth. The non - standard price spread of the drawing material has slightly narrowed [112][119]. Supply - New capacity has been put into operation on a large scale from the end of 2024 to the middle of 2025, with an effective capacity growth rate of 12.7%. The supply is expected to be abundant, but there may be a marginal reduction in supply if some PDH devices stop production in January [140]. - The inventory has been transferred to the middle - stream, and the overall inventory is higher than the same period last year [97]. Demand & Inventory - The downstream start - up is temporarily stable, but the orders of some industries such as plastic weaving and pipes have seasonally weakened. The overall downstream demand shows a downward trend [96]. - The inventory removal is not smooth, and the downstream's lack of confidence in the future market has led to a high inventory level [97].

Core Viewpoint - Mitsui Chemicals, Idemitsu Kosan, and Sumitomo Chemical have reached a final agreement to create a strong polyethylene production company, addressing the challenges in Japan's polyethylene market due to declining demand and oversupply issues [1][2]. Group 1: Company Collaboration - The three Japanese chemical giants announced a memorandum of understanding on September 10 to integrate their polyethylene businesses, specifically combining the operations of Prime Polymer Co., Ltd. (PRM) and Sumitomo Chemical's polypropylene (PP) and linear low-density polyethylene (LLDPE) businesses in Japan [1]. - The agreement involves two phases: the first phase will see Sumitomo Chemical transfer its PP and LLDPE business to PRM, acquiring a 20% stake in PRM by July 1, 2026, while Mitsui will hold 52% and Idemitsu will hold 28% [1][2]. Group 2: Market Context - Polyolefins account for approximately 50% of Japan's plastic demand, making it crucial for the industrial sector [1]. - The Japanese market is experiencing a decline in demand for polyolefins due to population decrease and changing lifestyles, leading to expectations of further demand reduction [1]. Group 3: Production Capacity and Financial Impact - PRM currently has a production capacity of 1.26 million tons/year for polypropylene and 0.55 million tons/year for polyethylene, making it a major producer in Japan [2]. - After the completion of the integration, PRM's total production capacity will reach 2.31 million tons/year, with projected net sales of 387.3 billion yen for the fiscal year 2024 and annual cost savings exceeding 8 billion yen [2]. - Following the integration, the combined production capacity will account for over 30% of Japan's domestic plastic capacity [2].