CITIC Construction Investment Futures: Rising Middle East conflict risk supports polyolefin prices, market supply and demand are both weak, and prices fluctuate within a range

In the short term, the US and Iran remain in a stalemate during temporary ceasefire negotiations, making it impossible to restart talks. The risk of renewed escalation in Middle East conflict is rising again, and oil prices are providing cost support for polyolefins. On the supply side, short-term maintenance units are expected to return, and polyolefin operating rates have rebounded slightly from their lows. However, from April, the expected impact from port arrivals is expected to begin feeding back the risk of supply disruption caused by the Strait blockade, although overall supply pressure remains not significant. On the demand side, ahead of the holiday, downstream packaging and plastic weaving sectors build up inventory in a concentrated manner. During the May Day holiday, end factories mostly shut down or reduce operating loads, and after the holiday, resumption progresses slowly. After the peak season for agricultural film ends, orders continue to shrink. On the inventory side, petrochemical stocks were reduced ahead of the holiday, and the amount of inventory buildup during the holiday is significantly lower than in the same period in previous years, with social inventory maintained at a neutral level. On the cost side, amid the geopolitical standoff in the Middle East, crude oil prices are fluctuating widely; oil-based plants continue to run at losses, while profits from coal-chemical businesses remain relatively stable, resulting in neutral cost support. As for price outlook, in the short term, both supply and demand are weak, so prices mainly move within a range of fluctuations; in the medium term, it is important to focus on the plant restart progress in late May, the strength of downstream replenishment, and crude oil price trends. (CITIC Futures)