Trump Plans to Exit USMCA Next Year! Oil Prices Rise for Two Consecutive Days, Plastic Futures Turn Green

1. Overnight Crude Oil Market Dynamics

The instability of the Russia-Ukraine situation remains evident, coupled with the high likelihood of the Federal Reserve cutting interest rates again in December, leading to an increase in international oil prices. NYMEXCrude oil futuresThe 01 contract is up $0.72/barrel at $59.67, an increase of 1.22%; the ICE Brent crude oil futures 02 contract is up $0.59/barrel at $63.26, an increase of 0.94%. The China INE crude oil futures 2601 contract is up 2.0 to 451.3 yuan/barrel, with a night session increase of 5.2 to 456.5 yuan/barrel.

Future Market Forecast

On Thursday, oil prices closed higher as the peace talks between Russia and Ukraine are still far from reaching an agreement. This is the result of two weeks of multi-party negotiations led by Trump's team. Putin pointed out that there are some issues in the U.S.-proposed mediation plan that Russia does not agree with. However, Russia expressed its willingness to continue holding more meetings with the U.S. government and thanked Trump for his efforts. From Trump's statements, he does not seem very discouraged and believes Putin is willing to end the conflict. In the short term, significant progress in advancing peace between Russia and Ukraine is unlikely, which means that the market's concerns about the negative factors based on this have temporarily subsided. However, this remains an uncertainty factor in the oil market in the future.

Recent trading days have shown a fluctuation rebound in oil prices, indicating that market concerns have somewhat eased. However, the rebound remains relatively limited and is unlikely to fully recover the losses incurred after the factor's emergence. The latest official prices released by Saudi Arabia show that it has lowered the prices of its main crude oil varieties to Asia to the lowest level in five years. Currently, global crude oil inventories are continuously accumulating, and the crude oil market is under the most supply pressure stage, which is expected to continue into the first quarter. In the short term, geopolitical factors will continue to cause disturbances, but are unlikely to reverse the downward oscillation trend under the pressure on oil prices. In terms of opportunities, it is recommended to focus on seizing opportunities to short at high levels, and pay attention to timing.

II. Macroeconomic Dynamics

1、Putin visits India, finalizes a $2 billion nuclear-powered submarine lease deal.

3. Source:The Bank of Japan's interest rate hike in December is almost certain.The government will not intervene.

Hassett: Believes that the Federal Reserve may cut interest rates at the next meeting, possibly by 25 basis points.

The World Gold Council: Gold prices may fluctuate within a range next year, and strong trends cannot be ruled out.

Saudi Aramco will lower the official selling price of crude oil to Asia in January next year to the lowest level since January 2021.

Insiders: Commodity trader Mercuria has canceled over 40,000 tons of LME copper warrants, driving copper prices to a record high.

8、U.S. Trade Representative Greer said that Trump is considering withdrawing from the USMCA next year and does not rule out the possibility of breaking the three-country binding.

9、Revelio Labs: The U.S. non-farm payrolls are expected to decrease by 9,000 in November, with October data revised from a decrease of 9,100 to a decrease of 15,500.

Meta CEO Zuckerberg plans to cut the Metaverse budget by up to 30%.

11、The People's Bank of China will conduct a 1 trillion yuan outright reverse repo operation.

The Ministry of Commerce: The Chinese government conducts export controls on rare earth-related items in accordance with laws and regulations.

The Ministry of Commerce responded to the EU's termination of its WTO dispute case against China: "It is the correct choice."

14、Ren Hongbin, President of the China Council for the Promotion of International Trade, led a delegation to attend a seminar with the Semiconductor Industry Association of America and its member companies.

The State Administration for Market Regulation: The new national standard for electric bicycles is proposed to be included in the 2026 supervision and inspection plan.

3. Early Morning Dynamics of the Plastic Market

Oil prices have risen for the second consecutive day! Overnight, the main domestic plastic futures contracts were all in the red.

Plastic 2601 contract is quoted at 6735 yuan/ton, down 0.71% compared to the previous trading day.

The PP2601 contract is quoted at 6331 yuan/ton, down 0.33% compared to the previous trading day.

PVC2601 contract reported 4481 yuan/ton, down 0.49% compared to the previous trading day.

Styrene 2601 contract reported at 6563 yuan/ton, down 0.17% from the previous trading day.

Section IV: Market Forecast

PE: The demand side remains weak, and downstream factories are heavily influenced by the lack of clear macroeconomic benefits and an unclear market outlook, resulting in a strong wait-and-see attitude. Procurement decisions are extremely cautious, with only minimal restocking being maintained. Most companies are purchasing small quantities based on their production schedules without any large-scale proactive restocking plans, leading to insufficient overall support for PE raw material procurement. Traders, facing dual pressures of ample spot supplies and weak demand, generally adopt aggressive price-cutting strategies to accelerate inventory clearance and avoid further stockpile accumulation. Some even offer flexible discounts to attract orders, which has stimulated a small amount of actual transactions to some extent, but has also further intensified the market's pressure, keeping the overall trading atmosphere subdued. In summary, the core contradiction of supply and demand looseness in the short-term PE market is unlikely to undergo substantial changes. The lack of macroeconomic benefits to support the market and the persistent weak demand are hard to reverse, while supply-side pressures continue to exist. Traders' strategies of cutting prices to clear stock are expected to continue, and the domestic polyethylene market is likely to maintain a weak and volatile pattern in the short term.

PP: The downstream industry is affected by both seasonal factors and weak demand. In the pipe sector, as temperatures drop in the northern regions, municipal and home decoration construction decrease, leading to a significant reduction in orders for drainage pipes, and companies have lowered their operating rates. In the home appliance sector, the production of air conditioner casings and small appliance parts is influenced by the off-season in terminal consumption, resulting in reduced frequency and volume of procurement for PP materials. Only the packaging sector sees a short-term replenishment demand from e-commerce, prompting a small amount of rigid demand procurement for thin-wall injection molding PP, but the scale is limited and is insufficient to drive overall demand. Most downstream companies are purchasing only in small batches based on production needs, with almost no proactive restocking plans. Currently, the spot market supply remains abundant, and traders generally face pressure to accelerate inventory reduction, compounded by the transmission of bearish sentiment from the futures market, leading to insufficient overall market momentum. Overall, the short-term local benefits are unlikely to reverse the core contradiction of relaxed supply and demand. The cost-side support lacks stability, and the weak demand situation is difficult to improve. It is expected that the polypropylene market will continue to experience weak fluctuations in the short term, with little possibility of substantial upward breakthroughs.

PVC: The futures price falling below 4500 once again may to some extent indicate the end of the current minor rally trend. In the context of shifting positions and changing months, after the futures price reached a high of 4591 and then declined, the upward range is relatively certain. The previous low-level adjustment was the first test of the 4416 level. This time, the market adjustment has confined the price fluctuations within the relatively narrow range of 4400-4600. Correspondingly, the spot market is also facing a dilemma of rising and falling prices, as the supply-demand side cannot provide much support or guidance. Small orders are made based on immediate needs, and currently, there is not much willingness in the spot market to stockpile at low levels. Overall, in the short term, the PVC spot market may still struggle to escape the situation of low-level narrow-range adjustments.