1. Report Industry Investment Rating - The investment rating for the plastics industry is "Oscillating Upward" [1] 2. Core View of the Report - The report suggests a strategy of buying on dips or implementing a 09 - 01 reverse spread. Although there are issues such as high inventory and low - season demand in the plastics industry, the upcoming release of a new round of stability - growth work plans for key industries and the elimination of old and backward devices are expected to improve market sentiment [1] 3. Summary by Relevant Catalogs Strategy Analysis - On July 24, the plastic operating rate remained at around 87%, a neutral level. The PE downstream operating rate rose 0.64 percentage points to 38.51%, still at a relatively low level in recent years. The petrochemical de - stocking speed has accelerated, but the inventory is still high. The coal price has risen significantly due to production checks. With new capacity coming on - stream and restart of some devices, the plastic operating rate has increased slightly. Considering the upcoming policies and market sentiment improvement, it is recommended to buy on dips or implement a 09 - 01 reverse spread [1] Futures and Spot Market Conditions - Futures: The plastics 2509 contract oscillated upward with a decrease in positions, closing at 7385 yuan/ton, up 0.89%. The trading volume decreased by 16,764 lots to 371,617 lots [2] - Spot: The PE spot market showed mixed price movements, with price changes ranging from - 30 to + 50 yuan/ton. LLDPE was priced at 7160 - 7440 yuan/ton, LDPE at 9280 - 9630 yuan/ton, and HDPE at 7620 - 8250 yuan/ton [3] Fundamental Tracking - Supply: On July 24, the number of overhaul devices changed little, and the plastic operating rate remained at around 87%, a neutral level [4] - Demand: As of the week of July 18, the PE downstream operating rate rose 0.64 percentage points to 38.51%. The agricultural film is in the off - season with a slight decrease in orders, while packaging film orders increased slightly. The overall downstream operating rate is still at a relatively low level in recent years [4] - Inventory: The petrochemical early inventory on Thursday decreased by 15,000 tons to 750,000 tons, 40,000 tons higher than the same period last year. The de - stocking speed has accelerated, but the inventory is still high [4] - Raw Materials: Brent crude oil's October contract oscillated around $68/barrel. The Northeast Asian ethylene price remained flat at $830/ton, and the Southeast Asian ethylene price also remained flat at $820/ton [4]

1. Report Industry Investment Rating - The investment rating for the plastics industry is "Oscillating Upward" [1] 2. Core View of the Report - The plastics market is expected to experience a strong oscillation in the near future. It is recommended to switch to buying on dips or engage in a 09 - 01 reverse spread strategy. This is due to factors such as the restart of previously shut - down production facilities, the impact of coal price increases on costs, the current situation of downstream demand, and positive market sentiment driven by government policies [1] 3. Summary by Relevant Catalogs Strategy Analysis - On July 22, the restart of maintenance devices in Zhejiang Petrochemical Phase II LDPE and Shanghai SECCO HDPE led to the plastics operating rate rising to around 87%, currently at a neutral level. The downstream PE operating rate increased by 0.64 percentage points to 38.51% week - on - week. Although the agricultural film is in the off - season with a slight decrease in orders, packaging film orders increased slightly. The overall downstream PE operating rate is still at a relatively low level in recent years. The de - stocking speed of petrochemicals was slow last week, and petrochemical inventory is at a relatively high level in recent years. Due to coal production inspections, coal prices have risen significantly. With new production capacity coming on - stream and the restart of maintenance devices, and considering government policies, it is recommended to buy on dips or engage in a 09 - 01 reverse spread [1] Futures and Spot Market Conditions - **Futures**: The plastics 2509 contract reduced positions and oscillated upward, with a low of 7264 yuan/ton, a high of 7373 yuan/ton, and a final closing price of 7368 yuan/ton, above the 60 - day moving average, up 1.26%. The open interest decreased by 13,406 lots to 394,148 lots [2] - **Spot**: Most of the PE spot market prices rose, with price changes ranging from - 50 to + 50 yuan/ton. LLDPE was reported at 7130 - 7440 yuan/ton, LDPE at 9240 - 9630 yuan/ton, and HDPE at 7660 - 8220 yuan/ton [3] Fundamental Tracking - **Supply**: On July 18, there were few changes in maintenance devices, and the plastics operating rate remained at around 84%, currently at a neutral level [4] - **Demand**: As of the week of July 18, the downstream PE operating rate increased by 0.64 percentage points to 38.51% week - on - week. The agricultural film is in the off - season, with a slight decrease in orders, while packaging film orders increased slightly. The overall downstream PE operating rate is still at a relatively low level in recent years [4] - **Inventory**: Petrochemical early - morning inventory on Tuesday decreased by 30,000 tons to 790,000 tons compared to the previous day, 25,000 tons higher than the same period last year. The de - stocking speed of petrochemicals was slow last week, and petrochemical inventory is at a relatively high level in recent years [4] - **Raw Materials**: The Brent crude oil 09 contract fell to $68/barrel. The price of Northeast Asian ethylene remained flat at $830/ton week - on - week, and the price of Southeast Asian ethylene also remained flat at $820/ton [4]

Core Viewpoint - The Chinese PE market experienced a decline in supply from June to July, followed by an increase in August due to reduced maintenance and new capacity releases, with seasonal demand expected to support inventory levels [1][6]. Supply and Demand Analysis - In June, the total PE supply in China (domestic + imports + recycled) was estimated at 3.8 million tons, a month-on-month decrease of 4.46% [2]. - Domestic production saw a continued decline, with a month-on-month drop of 2.22%, influenced by maintenance shutdowns at several key plants [2]. - The supply of LDPE significantly decreased due to maintenance at major producers, while HDPE production increased as some plants shifted production [2]. - Import volumes were expected to decrease by 2.64% in June, with geopolitical factors and domestic demand expectations keeping imports at a low level in July and August [2][6]. Recycled PE Supply - The supply of recycled PE was projected to remain low at 130,000 to 160,000 tons per month during June and July due to low price differentials and seasonal demand [2]. - An increase in recycled PE supply is anticipated in August as seasonal demand begins to rise [2]. Production and Export Data - In May, China's plastic products production was 6.425 million tons, a year-on-year decrease of 1.8%, while cumulative production from January to May was 31.65 million tons, reflecting a growth of 5.4% [6]. - Exports of PE shopping bags in May reached 113,700 tons, a year-on-year increase of 4.12%, with cumulative exports from January to May totaling 542,500 tons, up 6.02% year-on-year [6]. Market Outlook - The second half of the year will require careful management of production and supply dynamics to navigate potential risks, particularly as oil-based PE production profitability has turned negative for some varieties [6].

Report Industry Investment Rating - The report gives a rating of "oscillating operation" for the plastics industry [1] Core Viewpoint - The plastics market is expected to oscillate at a low level in the near future due to factors such as increased supply from restarted and newly - commissioned plants, low downstream demand, high inventory pressure, and falling energy prices [1] Summary by Related Catalogs Strategy Analysis - Recommend to close long positions. The restart of maintenance devices has increased the plastics operating rate to about 87%, reaching a neutral level. The downstream operating rate of PE has decreased to 38.69%, with a decline in agricultural film orders and a slight increase in packaging film orders. Petrochemical inventory is at a neutral level. The US tariff increase and restricted ethane imports, along with the cooling of geopolitical risks in the Middle East and falling oil prices, contribute to the expected low - level oscillation of plastics [1] Futures and Spot Market Conditions - **Futures**: The plastics 2509 contract oscillated with reducing positions, closing at 7271 yuan/ton, down 0.27%. The trading volume decreased by 12,263 lots to 461,763 lots [2] - **Spot**: Most PE spot prices fell, with price changes ranging from - 200 to + 50 yuan/ton. LLDPE was quoted at 7260 - 7590 yuan/ton, LDPE at 9580 - 9830 yuan/ton, and HDPE at 7700 - 8100 yuan/ton [3] Fundamental Tracking - **Supply**: The restart of maintenance devices in Dushanzi Petrochemical and Tarim Petrochemical has increased the plastics operating rate to about 87%, reaching a neutral level [1][4] - **Demand**: As of the week of June 20, the downstream operating rate of PE decreased by 0.06 percentage points to 38.69%. Agricultural film entered the off - season, with a decline in orders and a slight increase in raw material inventory. Packaging film orders increased slightly, and the overall downstream operating rate was at a relatively low level compared to the same period in previous years [1][4] - **Inventory**: Petrochemical inventory decreased to 76.5 tons on Wednesday, 2.5 tons higher than the same period last year. It is at a neutral level compared to the same period in previous years [1][4] - **Raw Materials**: Brent crude oil 08 contract fell to $68/barrel. Northeast Asian ethylene prices remained flat at $860/ton, and Southeast Asian ethylene prices remained flat at $850/ton [4]