Core Viewpoint - The polyethylene (PE) futures market has experienced a cooling sentiment, with prices under pressure and a weekly decline of 2.88%, closing at 6812 points, influenced by weakening crude oil prices and a supply-demand imbalance as the Chinese New Year approaches [5][23]. Supply Side - The supply side has seen a slight decrease in the number of shutdowns, with a total of approximately 370,000 tons of production capacity affected by maintenance. The operating rate for the PE industry is at 85.91%, an increase of 0.56% week-on-week, while weekly production reached 712,400 tons, up by 0.64% [8][26]. - China remains a net importer of PE, with a decrease in foreign offers and low purchasing intentions from importers. The cumulative PE export volume is 503,800 tons, a year-on-year increase of 9,510 tons, while imports have decreased to 5,446,300 tons, down by 237,700 tons year-on-year [10][28]. Demand Side - Demand is entering a seasonal lull as the Chinese New Year approaches, with downstream factories shutting down, leading to a decrease in overall operating rates to 33.73%, down by 4.03% [11][29]. - In the agricultural film sector, the operating rate is at 30.18%, down by 4.38%, while the PE packaging film sector is at 38.82%, down by 3.25%. The PE pipe sector has an operating rate of 23.67%, down by 4.16% [13][31]. Inventory - Domestic PE inventory has shown a significant accumulation in production enterprises, with a total inventory of 379,700 tons, an increase of 56,700 tons week-on-week. Trade inventories have slightly decreased to 23,200 tons [14][32]. Cost Side - The cost side remains uncertain due to geopolitical factors affecting crude oil prices. The upcoming negotiations between the U.S. and Iran may influence oil prices, but current trends show limited support for PE costs. The volatility in propylene and methanol futures prices has also decreased [16][34]. Summary - In the short term, the PE market is expected to lean towards a supply strong and demand weak scenario, with high production rates and accumulating inventories. The market sentiment is cautious due to the upcoming holiday and potential geopolitical risks, suggesting a recommendation for reduced positions ahead of the holiday [19][37].

Core Viewpoint - The rebound in polyethylene prices is limited due to insufficient fundamental support, primarily driven by capital market dynamics and geopolitical tensions [5][18]. Supply Side - Domestic polyethylene supply showed a slight increase in operating rates and production, with an operating rate of 84.67%, up 3.08% week-on-week, and a weekly production of 69.89 million tons, an increase of 2.91 million tons [8][27]. - The industry is experiencing a gradual release of capacity as major facilities restart operations, which may continue to exert pressure on prices [8][27]. - The import and export windows for polyethylene remain closed, with domestic imports expected to decline further [10][29]. Demand Side - The demand side is characterized by a traditional consumption off-season, leading to cautious purchasing behavior from downstream sectors [11][30]. - The overall operating rate in downstream industries is 39.53%, down 1.4% week-on-week, primarily due to the upcoming Spring Festival [11][30]. - Specific sectors like agricultural films are experiencing reduced operating rates, with the agricultural film sector at 36.32%, down 0.61% [13][32]. Inventory - Domestic polyethylene inventory continues to decrease, but the rate of reduction has slowed down [14][33]. - As of January 13, production enterprise inventory was 335,000 tons, down 1.53 million tons week-on-week, while trader inventory was 26,600 tons, down 0.26 million tons [14][33]. Cost Side - Rising raw material prices, influenced by geopolitical factors, are providing some support to the market, although the overall oil market remains weak [16][35]. - The recent increase in propylene and methanol futures prices has not significantly improved the spot market transaction atmosphere [16][35]. Summary - Short-term polyethylene prices are expected to maintain a "cost support + capital-driven" oscillating strong trend, but the upside is constrained by fundamental factors [18][37]. - With strong cost support and positive capital market sentiment, polyethylene prices may continue to rise slightly, but the overall volatility is likely to be limited due to high price levels and low acceptance from downstream buyers [18][37].