【Analysis of market conditions】：
First of all, the downstream demand for general consumer goods, especially the weak demand for packaging, is the core of the market's continued weakness. Relevant downstream such as cushioning packaging film and anti-epidemic materials that had a strong performance last year have not had a good market performance in 2021. The supply side of the superimposed market continues to expand, and the market continues to be weak, which is the normal pattern. Short-term is not suitable for shorting, and the trend pressure is still high.
Second, In the past month, there have been two centralized replenishments in the spot market, but none of them have provided substantial support to the market because the downstream procurement cycle has been prolonged and a low inventory operation mode has been adopted. From the perspective of the supply side, the supply of PE will increase significantly in 2021, and the substantial increase in supply will cause the basis to continue to be weak. Only after the expansion of demand in the second half of the year, the terminal industry to expand their own inventory levels, in order to gradually digest the current capacity pressure. Especially during the market rally in late April-early May, we see that the terminal industry has failed to follow the PE prices to climb significantly, and the downstream is obviously weaker than the polyolefin industry itself, which is not the pattern of a sustained rising industry. Therefore, we still define the current market as an oscillating market, which is a period of decline and will still rise after the third quarter.
Third, fiscal easing, monetary easing, and inflation are major trends, and there should not be too much hesitation. In the off-season of the first half of 2021, terminal demand will not be able to expand further, leading to a decline in terminal operating rates and reduced stockpiling, which may cause commodity prices to weaken in the second quarter. However, the inflation pattern in the second half of the year will continue to support commodity prices.