Trump: Furniture Tariff Will Be Introduced Soon! Oil Prices Plummet, Retracing Nearly Half of the Rebound Gains, Plastic Futures Major Contracts All in Red

I. Overnight Crude Oil Market Update

The market is reassessing the progress of Russia-Ukraine peace talks, believing that there is still an opportunity for easing geopolitical tensions, leading to a decline in international oil prices. NYMEXCrude Oil FuturesThe October WTI crude oil contract settled at $63.25 per barrel, down $1.55, or 2.39% on a month-on-month basis; the October ICE Brent crude oil futures contract closed at $67.22 per barrel, down $1.58, or 2.30% month-on-month. The China INE crude oil futures October contract (2510) rose 4.2 yuan to 497.7 yuan per barrel, but fell 10.9 yuan to 486.8 yuan per barrel in the night session.

Future Market Forecast

Oil prices staged a bearish engulfing pattern, with a sharp pullback on Tuesday that completely erased Monday’s gains and pushed prices even lower. This performance indicates current market instability and the fragility of the four-day rebound. Capital is reacting to the recent stagnation in Russia-Ukraine peace talks; on the contrary, the two sides have intensified mutual attacks. Ukraine’s strikes on Russia’s energy infrastructure have caused tightness in domestic fuel supply in Russia and may increase Russia’s crude oil exports. Trump expressed disappointment over Russia’s ongoing attacks in Ukraine, including those that reportedly occurred soon after his phone call with Putin. Zelensky is not entirely blameless either. Additionally, Trump threatened that if no progress is made on a Russia-Ukraine peace agreement within the next two weeks, he will impose sanctions on Russia. Europe has also been trying to impose more sanctions on Russia. All these factors have caused market disruptions.

The most critical factor facing the crude oil market in the next six months is the bearish impact of severe oversupply under the accelerated production increase by OPEC+. Changes surrounding this oversupply issue are the core driver of the oil market. In the previous week, a significant decline in overall crude inventories eased market concerns about supply pressure. According to API data released early Wednesday, U.S. crude oil inventories fell by 974,000 barrels for the week ending August 22, slightly below market expectations. However, refined product inventories also declined across the board, making the overall data bullish for oil prices. Nevertheless, oil prices showed a muted reaction.

The oil price movement over the past two days reflects that, in the absence of further driving news, the price lacks the momentum to break through the resistance level. After the technical correction demand has been relatively fully released, the oil price naturally encounters resistance and falls back. Currently, the progress of the Russia-Ukraine issue remains the biggest short-term market disturbance factor. The oil price movement still carries a certain degree of uncertainty. From a medium to long-term perspective, the immense supply-side pressure facing the oil market is an unavoidable certainty. After the oil price rebound is resisted and ends, it will short-term turn to seek a bottom again. The key opportunity is still to short on rallies, participate cautiously, and pay attention to timing.

II. Macroeconomic Trends

1. Federal Reserve - ①Foreign Media:The Trump administration is weighing proposals that would influence regional Federal Reserve Banks.And strengthen the review of the selection process for local Federal Reserve Bank presidents.

②Cook's lawyer has sought a judicial ruling regarding Trump's dismissal.The Federal Reserve officials and Trump both stated that they will abide by the court's ruling. Trump said he already has a candidate in mind to succeed Powell and may appoint Milan to another long-term position within the Federal Reserve. Trump bluntly stated that he will soon hold the majority of seats on the Federal Reserve.

Former White House National Economic Council Director Brainard: (Trump’s removal of Federal Reserve Governor Cook) is an unprecedented attack on the Federal Reserve and could lead to...Inflation and long-term interest rates are rising.。

Barkin: Predicts that interest rates will adjust moderately.

2. Tariff War - ① Trump:Furniture tariffs will be implemented soon, and the tariffs will be very high.Export restrictions and tariff measures will be imposed in response to foreign digital taxes.

Indonesian officials: The United States has in principle agreed to exempt Indonesian palm oil, cocoa, and rubber from the 19% tariff.

German media reports: Trump has been rejected at least four times recently when calling Modi.

3. U.S. Secretary of Commerce Raimondo: The government is exploring potential equity participation opportunities in the Department of Defense and other industries.

Trump warnsWaging an "economic war" against RussiaAt the same time, it accused Ukraine of "not being innocent."

The Russian government has extended broader gasoline export restrictions until September 30.

6. Sources: ExxonMobil and Rosneft hold secret talks to discuss returning to Russia.

7、Trump says he may visit China later this year or as soon as possible.The Ministry of Foreign Affairs responded: Head-of-state diplomacy plays an irreplaceable strategic leading role in China-U.S. relations, and the two heads of state have maintained close contact and communication.

8. The spokesperson of the Ministry of Foreign Affairs responded to reports that the International Trade Representative and Vice Minister of the Ministry of Commerce will visit the United States to meet with U.S. officials: For specific questions, it is recommended to consult the relevant Chinese authorities.

The State Council issued the "Opinions on Deeply Implementing the 'Artificial Intelligence+' Action," calling for the acceleration of six key actions in the implementation of "Artificial Intelligence+." It supports the innovation and breakthrough in AI chips and the cultivation of enabling software ecosystems, and accelerates the technological breakthrough and engineering implementation of ultra-large-scale intelligent computing clusters.

10. Ministry of Housing and Urban-Rural Development: From January to July, 19,800 urban old residential communities were newly started for renovation nationwide.

3. Early Morning Dynamics of the Plastic Market

Oil prices plummeted, giving back nearly half of the rebound gains! The main domestic plastic futures contracts were all in the red overnight.

The plastic 2601 contract is quoted at 7,408 yuan/ton, down 0.26% from the previous trading day.

The PP2605 contract closed at 7,047 yuan/ton, down 0.35% from the previous trading day.

The PVC2601 contract reported at 5015 yuan/ton, down 0.22% from the previous trading day.

The styrene 2510 contract was quoted at 7,261 yuan/ton, down 0.77% from the previous trading day.

4. Market Forecast

In the short term, the polyethylene (PE) market is expected to exhibit a fluctuating but slightly strong trend characterized by "cost support as a floor and off-season demand constraints." The support from the cost side will limit the downside price space, but the weak off-season demand downstream makes it difficult for the market to rise significantly. As the traditional peak demand season of "Golden September and Silver October" approaches, market expectations for a subsequent demand recovery will gradually strengthen. This expectation may provide some boost to current market sentiment; however, the market is still expected to mainly consolidate within a range in the short term.

From the perspective of market supply and demand, there are currently no shutdowns or restarts of polypropylene (PP) production units, and the domestic supply of polypropylene remains relatively stable. In addition, with the traditional peak season of “Golden September and Silver October” approaching, the operating rates of downstream enterprises are expected to increase, which may boost demand for polypropylene and provide certain support for market prices. Taking both bullish and bearish factors into account, supported by costs and seasonal demand expectations, market prices are likely to fluctuate within a certain range. It is expected that the polypropylene market will show a trend of range-bound oscillation in the short term.

PVC: There is little to note on the supply and demand front, with no significant improvement seen on the demand side. Procurement remains limited to essential needs at low prices. Formosa Plastics in Taiwan has raised its PVC export prices for September shipments: up by $30/ton to $760/ton CFR India, up by $10/ton to $710/ton CFR China Mainland, up by $10/ton to $655/ton FOB Taiwan, and up by $10/ton to $725/ton CFR Southeast Asia. Overall, it is expected that spot market prices will continue to adjust within a narrow range.