Since the beginning of 2026, the market has welcomed a strong rally, with an initially robust performance. Over the following month, however, the overall market trend has exhibited repeated fluctuations, forming an M-shaped pattern. Recently, the market focus has shifted downward, reflecting a weaker structure. Nevertheless, as the holiday season approaches, downstream factories have gradually begun arranging shutdowns, leading to a gradual decline in market activity. Against this backdrop, significant price fluctuations are unlikely in the near term, and the market is expected to remain in a state of weak volatility in the short run.

How will the market develop after the holiday? From a supply and demand perspective, the dominant logic remains abundant supply versus weak demand, which is unlikely to see a significant shift in the short term.

Looking at supply, pressure remains prominent:

First, in terms of new capacity, recent new startups have already achieved stable operation and normal output, significantly boosting domestic supply. Second, regarding maintenance schedules, most major petrochemical plants have not planned large-scale shutdowns for maintenance around the Spring Festival period.

Currently, the overall operating rate remains consistently above 85%, placing it at a relatively high level compared to previous years. Based on production schedules and raw material stocking conditions, this high operating rate is expected to persist at least through the post-holiday period. Against this backdrop, petrochemical inventories are likely to gradually accumulate after the holiday, potentially reaching a yearly peak. Preliminary estimates suggest inventory levels may range between 0.9 and 1 million tons.

On the demand side, the recovery is expected to be relatively slow. Although spring mulching film production will provide some essential demand support for raw materials-typically gradually ramping up from late February, the impact of the Spring Festival holiday may lead to a slower-than-usual labor market recovery. Factors such as transportation could delay workers' return, resulting in a slower resumption of production at downstream factories and a gradual increase in operating rates. Additionally, most other downstream sectors-including construction materials, automobiles, and packaging-are still in their seasonal demand off-season. Growth of end-users' orders is not obvious, and finished product inventories are still being absorbed. As a result, procurement of raw materials remains largely cautious, focused on replenishment based on immediate needs, with little widespread willingness to stock up in large quantities.

In summary, facing the pressure of concentrated inventory accumulation during the Spring Festival, persistently high inventory levels and the expectation that demand will recover gradually after the holiday, the pace of destocking is likely to slow significantly, and prices will continue to face downward pressure. Market trends are always driven by multiple factors, and supply-demand dynamics are just one of them. Even the upward trend seen at the beginning of 2026 was the result of a convergence of fundamentals, the macroeconomic environment at the time, and crude oil price movements. During the upcoming Spring Festival holiday, variables such as overseas geopolitical developments, fluctuations in international oil prices, and potential adjustments in domestic macroeconomic policies after the holiday remain highly uncertain. Their direction and impact will require close monitoring. Going forward, key areas to watch include the pace of downstream production resumption, raw material procurement schedules, crude oil price volatility, and macroeconomic policy shifts.