【Analysis of market conditions】：
First, recent market transactions have been weak, especially the current weaker basis and weaker spread are really not good signals. The current downstream demand for general consumer goods, especially the weak demand for packaging, is the core of the market's continued weakness. The previous strong LDPE prices have also fallen. The supply side of the superimposed market continues to expand, and the market's mid-term turnaround will take time to repeatedly brew, and the short-term market rebound is nearing an end.
Second, in the past two months, there have been two centralized replenishments in the spot market, but they have failed to provide substantial support to the market. Due to the prolonged downstream procurement cycle, a low inventory operation mode has been adopted. From the perspective of the supply side, the supply side is further put into production, and 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 demand expansion in the second half of the year, the terminal industry expands its own inventory level, can gradually absorb the current pressure on production capacity. The downstream is obviously weaker than the polyolefin industry itself. This is not a pattern that a continuously rising market should have. Therefore, we still define the current market as a weekly shock market. There will be a decline after a short-term rise, and it will still be strong 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 downstream related demand of PE remains stable in the second half of the year, and the order execution period in the second half of the year will drive PE to pick up and strengthen.