【Analysis of market conditions】：
First of all, demand is stable this year, but downstream profits are generally poor. After the previous price drop, profit margins opened up, and the downstream market entered the market to replenish low-priced goods, and market transactions continued to improve, resulting in a rebound in polyethylene prices. However, after the price rebounded, the downstream purchasing willingness decreased, and they were unwilling to buy high-priced goods. The short-term rebound was unsustainable, and the upward space was limited.
Second, before the fourth quarter, the general market background demand was ordinary, the supply gradually expanded, and the downstream profit of the industrial chain was limited. In particular, the impact of the large expansion of PE production capacity on the market cannot be ignored. Although it is not absolutely negative, the digestion of new production capacity requires downstream purchases to increase, either by rigid demand expansion or by increasing inventory levels. However, under the current weak demand, downstream companies will only be interested in low-priced sources and resist high-priced sources even if they stock up. Therefore, the market performance will be a long shocking market. The key to the second half of the year will be the new downstream order trend. We do not believe that the current weak state of downstream orders in the entire industry chain will continue until the end of the year. The centralized execution of orders will drive the downstream replenishment of the market, and the current upstream supply end of the industry chain has low inventory, and it is prone to price break-through range fluctuations caused by the rise in volatility caused by low inventory.
Third, fiscal easing, monetary easing, and inflation are major trends, and there should not be too much hesitation. We need to see that the epidemic is there, and fiscal easing and monetary easing are there. The fiscal contraction in the first half of the year was affected by the previous strong inflation expectations. With the re-emergence of deflation expectations, fiscal easing in the fourth quarter will continue in order to prevent economic stalls, resulting in a sharp increase in commodity prices in the fourth quarter.