Good morning, let's start with the important news.

**Israeli Airstrikes on Yemen's Capital Result in 4 Deaths and 67 Injuries**

According to local reports, on August 24th, the health department controlled by Yemen's Houthis announced that Israeli airstrikes on Yemen have resulted in 4 deaths and 67 injuries.

The Israeli military issued a statement that day saying it had attacked Houthi military targets in the Sanaa area of Yemen's capital, including military bases where the presidential palace is located, power plants, and fuel storage facilities used for Houthi military activities. The strikes were in response to repeated Houthi attacks on Israel and its civilians, including recent surface-to-surface missiles and drones launched toward Israeli territory. The Israeli military stated it would resolutely counter the Houthis' continuous attacks on Israel and remains determined to eliminate any threats to Israeli civilians when necessary.

According to Al Masirah TV controlled by Yemen's Houthis on August 24th, multiple locations in Sanaa were struck by Israeli forces, including oil companies and power stations. These targets were distributed across central, southern, and southwestern Sanaa. A Houthi military officer said: "Air defense forces successfully prevented most Israeli warplanes participating in the aggression and forced them to withdraw."

Since the outbreak of the latest round of Israeli-Palestinian conflict in October 2023, Yemen's Houthis have launched attacks on Israel-linked vessels in the Red Sea and Gulf of Aden to support Palestinians in Gaza. The Houthis have also repeatedly used missiles and drones to attack targets within Israel, while Israel has conducted multiple airstrikes on Houthi-controlled areas.

**Russian Foreign Minister: Putin Willing to Meet Zelensky with Conditions**

According to reports, Russia's Foreign Ministry released on August 24th a transcript of Russian Foreign Minister Lavrov's interview with American media, revealing details of the Alaska meeting between Russian and American leaders and views on the resolution process of the Russia-Ukraine conflict. Lavrov pointed out that Putin has repeatedly expressed willingness to meet with Zelensky, but with the prerequisite that such meetings could be expected to achieve corresponding results. When it comes to signing legal documents, all parties must clarify the legitimacy of the signatories. According to Ukraine's constitution, Zelensky currently lacks such legitimacy. Regarding the Russia-Ukraine direct negotiation process, Lavrov said that during the last round of Istanbul talks, Russia proposed establishing three working groups (including a political issues group), to which Ukraine has not responded to date.

**Russia Faces Large-Scale Attacks**

According to reports, Ukrainian National Security and Defense Council's Center for Countering Disinformation director Kovalenko stated on August 24th local time that Russia's Ust-Luga port in Leningrad Oblast was attacked by drones.

Kovalenko pointed out that Russia is facing large-scale attacks, with Ust-Luga port and other Russian infrastructure participating in the war economy being struck. He emphasized that Ust-Luga port is Russia's largest maritime hub in the Baltic region, and this port has been attacked multiple times.

Russia has not yet responded to this matter.

**Peak Demand Season Approaching, PX Prices Expected to Rise**

Since August 15th, the main PX futures contract has begun a round of upward correction. With the polyester industry's "golden September, silver October" peak demand season approaching, can PX futures prices maintain their strength?

Yong'an Futures intermediate analyst Gu Hanyang stated that from a fundamental perspective, on the supply side, both domestic and international PX facilities are in the maintenance recovery phase, with domestic operating rates gradually recovering. However, under the industry-wide "anti-involution" background, there are also voices for outdated capacity rectification. For example, a leading enterprise president indicated they would eliminate a batch of low-efficiency refining facilities and control investment pace and scale. As PX is a variety with relatively high capacity proportion among leading enterprises, the market is more concerned about its future supply situation.

"On the demand side, although some PTA facilities have undergone unexpected maintenance recently, polyester facility operating loads continue to rise. With inventory continuing to decrease, operating loads are expected to still have room for improvement. Overall, current PX supply and demand are basically balanced, while long-term supply has uncertainties, so prices perform relatively strongly among chemical products," Gu Hanyang said.

"Apart from active long position increases in recent days, upstream naphtha's tight short-term supply is the main driver for price increases of PX industrial chain upstream and downstream products," said Zhang Xiao, energy and chemical industry analyst at Guoyuan Futures.

Last Wednesday, market news indicated that due to continuous losses, South Korea's 10 largest petrochemical companies have agreed to business restructuring, including cutting up to 25% of naphtha cracking capacity. The Korean petrochemical industry has committed to reducing 3.7 million tons of naphtha cracking capacity.

In terms of imports and exports, China's PX import dependency continues to decline. As of 2024, China's PX import dependency has fallen to 19.76%, with last year's import volume at approximately 9.38 million tons. Among these, PX imports from South Korea reached 4.05 million tons, accounting for about 43% of China's total PX imports.

"Looking at PX downstream PTA, two PTA facilities with a combined capacity of 5.7 million tons/year have been commissioned this year, and another 3 million tons/year facility is planned for commissioning in the fourth quarter. Currently, PX capacity growth is significantly lower than PTA, and domestic PX end-of-June inventory was at the lowest level for the same period in nearly three years. If new capacity is put into operation as expected later, it will drive PX demand growth," Zhang Xiao believes that if South Korea later cuts 25% of naphtha cracking capacity, PX raw material supply will tighten, further boosting domestic PX prices. However, actual demand in the terminal market remains to be observed, combined with strong supply growth expectations for PX later, the rebound space for later prices may be limited.

Gu Hanyang told reporters that in recent two years, ethylene and its downstream capacity has been relatively oversupplied, with naphtha process route costs showing no obvious advantage, and cracking efficiency remaining at low levels. Some overseas regions have plans to reduce naphtha cracking capacity, but the impact on PX supply is expected to be relatively limited.

Currently, there is only one week left until the "golden September, silver October" peak demand season. The textile industry's operating rate is expected to improve. Can PX prices rise further?

Gu Hanyang stated that as the peak season approaches, current terminal order situations are improving, the industry is entering a seasonal load increase phase, and long fiber and short fiber inventories are being effectively reduced. Current inventory pressure is limited, and operating rates are expected to maintain high-level operation. As the most severely oversupplied segment in the current polyester industrial chain, bottle chips remain in concentrated production reduction status.

"Overall, polyester operating loads still have some room for improvement, but considering that long fiber and short fiber operating rates are already at relatively high levels, whether demand will exceed expectations mainly depends on bottle chip demand, especially whether exports can improve month-over-month. For PX, the current relatively high operating loads in the polyester industry still support its valuation. If bottle chip demand exceeds expectations, prices are expected to rise further," Gu Hanyang said.

"In mid-to-late August, the textile industry's operating rate has rebounded for two consecutive weeks, and the polyester industry's operating rate also showed 'three consecutive gains,' providing some support for PX and PTA prices. Considering that some PX facilities domestically and internationally still have maintenance plans in the fourth quarter, if polyester operating loads improve, then PX supply and demand are expected to continue improving, with the improvement magnitude depending on actual performance of terminal export growth and domestic demand," Zhang Xiao said.