Oil prices surged and then retreated! The "reciprocal tariffs" from the U.S. are about to land, and plastic futures are mixed.

1. Overnight Crude Oil Market Dynamics

On April 1st, the market's focus shifted from production sanctions to US tariff policies, raising concerns about the impact on demand prospects, leading to a decline in international oil prices. NYMEX crude oil futures contract for May dropped by $0.28 per barrel to $71.20, a decrease of -0.39%; ICE Brent crude oil futures contract for June also fell by $0.28 per barrel to $74.49, a decrease of -0.37%. China's INE crude oil futures main contract for May rose by 11.6 to 549 yuan per barrel, with the night session increasing by 4.3 to 553.3 yuan per barrel.

Outlook for the future

After several intraday surges, oil prices ultimately retreated, closing with a long upper shadow. Financial markets are increasingly shifting their attention to the upcoming tariff policy announcement by Trump, entering a risk-off mode with evident wait-and-see sentiment. For crude oil, geopolitical factors continue to influence the market. In the previous trading session, Trump's threats against Iran and Russia drove oil prices to rise more than expected. The uncertainty stemming from various factors has made investors more cautious in their participation.

From a geopolitical perspective, Iran's strong response to Trump's "bombing threat" has heightened market tensions. The U.S. continues to advance sanctions against Iran, with the Department of Defense deploying additional air power to strengthen its military posture in the Middle East. The U.S. has sent a second aircraft carrier to the region. Meanwhile, regarding Trump's statement that Russian President Putin was "very angry," Russia has expressed its inability to accept the current U.S. stance, as it fails to address Moscow's concerns about resolving the root causes of the crisis.

In addition, sources said that eight OPEC+ countries that have volunteered to cut production will hold a meeting on Thursday. Early API weekly data showed a significant build-up of 6.03 million barrels of crude oil, far exceeding market expectations, which could help alleviate supply concerns to some extent. With many influencing factors recently and facing multiple variable choices, high oil price volatility will remain the norm; note要做好风险管理，谨慎参与。 It seems like there is a part in your text that did not get fully translated. Here is the full translation: In addition, sources said that eight OPEC+ countries that have volunteered to cut production will hold a meeting on Thursday. Early API weekly data showed a significant build-up of 6.03 million barrels of crude oil, far exceeding market expectations, which could help alleviate supply concerns to some extent. With many influencing factors recently and facing multiple variable choices, high oil price volatility will remain the norm; note要做好风险管理，谨慎参与。 The untranslated part "要做好风险管理，谨慎参与。" translates to "Note要做好风险管理，谨慎参与。" which means "Pay attention to risk management and participate cautiously."

II. Macro Market Dynamics

◎ US Trade Policy - ① Trump will deliver remarks in the White House Rose Garden at 4 AM Beijing Time on Thursday; ② Sources: Trump is unlikely to specify any details regarding tariffs on pharmaceuticals on Wednesday; ③ The Washington Post: White House aides have drafted a proposal that could impose around a 20% tariff on at least most imported goods; ④ The White House: Tariffs announced on Wednesday will take effect immediately; ⑤ The Wall Street Journal: The Office of the United States Trade Representative is preparing a new tariff option for Trump, which would be a broad tariff on certain countries, with a rate potentially not as high as the proposed 20% general tariff; ⑥ CNBC: Treasury Secretary Baesent stated that the tariffs announced on Wednesday will be a ceiling, and subsequent measures can be taken by various countries to seek reductions in tariffs.

The Caixin China Manufacturing PMI for March recorded 51.2, an increase of 0.4 percentage points from February, reaching the highest level since December 2024, indicating that manufacturing production and business activities continue to expand at a faster pace.

The central bank conducted 64.9 billion yuan of 7-day reverse repo operations on April 1, while 37.79 billion yuan of reverse repos matured on the same day, resulting in a net withdrawal of 313 billion yuan. The central bank also disclosed that in March, the three policy banks fully repaid 200 billion yuan of the Pledged Supplementary Lending (PSL).

According to the Ministry of Commerce, from January to February this year, China's total service imports and exports amounted to 1,309.56 billion yuan, an increase of 9.9%. Travel services imports and exports reached 409.8 billion yuan, growing by 28.9%, making it the largest sector in service trade; among which, exports grew by 142.6%, and imports increased by 21.1%.

◎ The Ministry of Commerce held a national teleconference on advancing the trade-in program for consumer goods, calling for accelerated efforts to promote the widespread use of smart consumer electronics and fully address bottlenecks hindering policy effectiveness.

The eurozone's preliminary February CPI rose 0.6% month-over-month and slowed to 2.2% year-over-year, both in line with market expectations. Services inflation continued to fall, with the March figure declining from 3.7% to 3.4%. The eurozone's unemployment rate fell to 6.1% in February, hitting a record low, while the market expected it to remain unchanged at 6.2%. Market bets suggest there is an approximately 80% chance that the ECB will cut rates again this month.

◎ South Korea's exports in March increased by 3.1% year-on-year, while imports rose by 2.3%. Semiconductor exports grew by 11.9%, approaching the export record set in 2022. Automobile exports have rebounded for two consecutive months.

Three, Plastic Market Morning Session Dynamics

After oscillating, oil prices surged and then fell back. Overnight, the domestic plastic futures主力contract showed mixed performance.

The 2505 plastic contract is quoted at 7,678 yuan/ton, down 0.19% from the previous trading day.

PP2505 contract reported at 7341 yuan per ton, up 0.04% compared to the previous trading day.

The PVC2505 contract is reported at 5063 yuan per ton, down 0.65% from the previous trading day.

IV. Today's Market Forecast

PE: In terms of raw materials, the crude oil market may be affected by multiple factors. It is necessary to pay attention to changes in crude oil supply, U.S. tariff policies, geopolitical situations, and adjustments to OPEC+ policies for their impact on international oil prices. On the supply side, although there are expectations of new plant startups, the production increase will be limited in the short term, and overall supply is expected to remain relatively stable. However, it is necessary to continuously monitor the progress of new plant startups and the impact of changes in the international situation on imports. On the demand side, there is expected to be a marginal increase in demand from downstream sectors such as agricultural mulch films, packaging materials, and construction materials. However, factors such as overseas tariff hikes may limit the extent of growth to a certain degree. Overall, the polyethylene market is expected to consolidate within a range in the short term.

PP: On the raw material front, the crude oil market may be influenced by multiple intertwined factors, and attention should still be paid to changes in crude oil supply, U.S. tariff policies, geopolitical tensions, and adjustments to OPEC+ policies, among other factors affecting international oil prices. On the supply side, there are currently no plans for changes to PP plant operations before the holiday, and the impact of PP plant shutdowns remains relatively high. It is expected that supply pressure in the market will be moderate, although polyolefin inventories at the two major oil companies have accumulated, leaving destocking pressure unresolved. On the demand side, PP demand before the holiday is likely to remain driven by rigid procurement, with limited new orders from downstream sectors and cautious purchasing sentiment. Although downstream operations are gradually ramping up, overall demand release remains slow. In summary, the polypropylene market is expected to experience upward consolidation in the short term.

From a supply and demand perspective, the operating rate of chlor-alkali facilities remains high. The expectation of maintenance, which had been anticipated over time, has gradually diminished. Additionally, there are no major maintenance plans expected in the near term, keeping PVC supply relatively stable at a high level. For chlor-alkali companies, although PVC is individually loss-making, the profit situation for caustic soda is quite good. In terms of PVC downstream demand, it is currently only maintaining essential purchases, and after the price increases in both the spot and futures markets, downstream buyers have become less active, tending to place low bids for inventory replenishment. There are insufficient variable factors from the supply and demand side to drive prices. On the policy front, there were no significant directional influences in the first quarter, and given the tone of the real estate sector, PVC is unlikely to perform well. It is expected that in the short term, the spot market for PVC will continue to maintain a narrow range of adjustments. The current spot price for calcium carbide method No. 5 type PVC in East China is within the range of 4800-5000 yuan/ton.