Market Analysis

In terms of prices and basis, the closing price of the L main contract is 7,677 yuan/ton (-16), the closing price of the PP main contract is 7,328 yuan/ton (14), the LL spot price in North China is 7,830 yuan/ton (-10), the LL spot price in East China is 7,870 yuan/ton (-30), the PP spot price in East China is 7,330 yuan/ton (0), the LL basis in North China is 153 yuan/ton (6), the LL basis in East China is 193 yuan/ton (-14), and the PP basis in East China is 2 yuan/ton (-14).

In terms of upstream supply, the operating rate of PE is 80.7% (-3.9%), and the operating rate of PP is 77.0% (-5.1%).

In terms of production profits, the profit for PE oil-based production is 648.4 yuan/ton (254.4), the profit for PP oil-based production is -161.6 yuan/ton (254.4), and the profit for PDH-based PP production is 87.3 yuan/ton (136.6).

In terms of import and export, the import profit for LL is -46.6 yuan/ton (330.5), the import profit for PP is -26.9 yuan/ton (239.5), and the export profit for PP is 35.1 USD/ton (-30.7).

In terms of downstream demand, the operating rate of PE downstream agricultural film is 40.4% (up 1.1%), the operating rate of PE downstream packaging film is 45.4% (up 3.7%), the operating rate of PP downstream woven bags is 47.4% (unchanged), and the operating rate of PP downstream BOPP film is 61.5% (unchanged).

During the spring maintenance period, upstream petrochemical plants have many polyethylene production units undergoing repairs. The Inner Mongolia Baofeng No. 3 line has yet to produce qualified products, resulting in delayed startup. The new facilities at Shandong New Era and Huizhou ExxonMobil are gradually planning to start operations, but future supply will continue to face pressure. Crude oil prices have rebounded, leading to a decline in PDH propylene production margins, but overall cost support remains acceptable. The downstream agricultural film sector is in its peak production season, with an increase in order volume; however, the operating rate for agricultural films is expected to reach a high point, and overall new orders for factories are limited, with weak demand for replenishing inventory. Upstream inventory and social inventory depletion are proceeding slowly.

Strategy

Unilateral: Plastic is cautiously bearish.

Cross-period: None.

Risk

Geopolitical influences, fluctuations in crude oil prices, and the recovery of downstream demand.