Core Insights - The launch of monthly average price futures for LLDPE, PVC, and PP has been successful, providing a stable pricing risk management solution for the chemical industry [1][5] - The trading volume and market participation have shown positive trends, indicating a growing acceptance of these financial instruments [1][5] Group 1: Market Performance - As of November 28, the monthly average price futures for the three chemical products have seen a cumulative trading volume of 23 trading days, with PP futures leading at 94,500 contracts and a transaction value of 3.053 billion [1] - The closing prices for the near-month contracts L2602F, V2602F, and PP2602F have decreased by 3.03%, 3.92%, and 3.69% respectively, reflecting market consensus on future monthly averages [2] Group 2: Industry Participation - Major companies like Zhejiang Mingri Holdings and Jingbo Petrochemical have actively engaged in trading these futures, with institutional clients accounting for over 60% of the transaction volume [2][4] - Jingbo Petrochemical has utilized the PP2602F contract for forward hedging, aligning with their long-term sales contracts that are linked to monthly average prices [3] Group 3: Future Outlook - The monthly average price futures are expected to play a significant role in the risk management framework for commodities, with companies expressing optimism about their potential [6] - There is a call for further training and optimization of contract designs to enhance market functionality and broaden participation [6]

Core Insights - The chemical industry is facing significant challenges due to global economic downturn and overcapacity, leading to price volatility, trade barriers, and tight cash flow [1] - The conference "DCE. Industry Action - Focus on Monthly Average New Tools, Building the Resin Industry Chain" was successfully held, highlighting the importance of futures markets in supporting the real economy [1][2] Group 1: Industry Challenges - The resin industry chain is experiencing a complex market environment with increasing price fluctuations and a growing need for risk management [2] - High supply, high inventory, and weak demand are creating a challenging landscape for downstream production enterprises [8] Group 2: Futures Market Innovations - The Dalian Commodity Exchange has launched monthly average price futures for linear low-density polyethylene, polyvinyl chloride, and polypropylene, which are the first cash-settled futures in the domestic market [4] - Monthly average contracts provide a stable pricing mechanism that helps companies manage long-term price volatility risks and enhances the resilience of the entire industry chain [4] Group 3: Market Outlook - The PVC market is under pressure due to high inventory and a sluggish real estate sector, but future demand from regions like India and Southeast Asia is expected to rise, potentially stabilizing prices [5] - The conference included discussions on how to drive inventory destocking and optimize procurement and sales pricing through a combination of spot and futures trading [8] Group 4: Industry Recognition - The conference received positive feedback from industry participants, who appreciated the depth and relevance of the discussions, indicating a strong desire for more high-quality professional exchange events in the future [12]

Core Viewpoint - The launch of monthly average price futures for LLDPE, PVC, and PP on October 28 has been smooth, with active participation from industry players, enhancing risk management tools in the sector [1] Group 1: Market Performance - On the first trading day, the monthly average price futures for LLDPE, PVC, and PP were listed with contracts for the months L2602, V2602, and PP2602, with benchmark prices based on the settlement prices of corresponding physical delivery futures on October 28 [1] - By the close on October 29, a total of 8,254 contracts were traded, amounting to 230 million yuan, with open interest at 2,468 contracts and 89.7% of the positions held by institutional clients, indicating strong industry participation [1] - The closing prices for the near-month contracts L2602F, V2602F, and PP2602F showed slight increases of 0.04%, 0.86%, and 0.10% respectively compared to the benchmark prices [1] Group 2: Industry Participation - Leading companies such as Jingbo Petrochemical, Zhongtai International Trade, and Mingri Holdings actively participated in the first day of trading [2][3] - Jingbo Petrochemical, with an annual capacity of 600,000 tons for polypropylene, utilized the PP2602F contract to lock in sales prices, aligning with their monthly sales and average settlement model [2] - Zhongtai International Trade used the V2602F contract for hedging long-term orders, enhancing price risk management in the PVC industry [3] Group 3: Future Outlook - The Dalian Commodity Exchange plans to continue optimizing rules and improving market quality to facilitate industry participation and enhance the influence of Chinese chemical prices [4] - The introduction of monthly average price futures is expected to provide more pricing references for companies in export pricing, aiding their integration into the global trade system [2]

Core Viewpoint - The launch of monthly average price futures for LLDPE, PVC, and PP on October 28 marks a significant development in China's chemical industry, providing new risk management tools for enterprises and enhancing market participation [1][2]. Group 1: Market Participation and Performance - The first day of trading for the three chemical products saw a total of 8,254 contracts traded, amounting to 230 million yuan, with a position of 2,468 contracts, indicating strong participation from industry players [1]. - The closing prices for the near-month contracts L2602F, V2602F, and PP2602F showed slight increases of 0.04%, 0.86%, and 0.10% respectively compared to the listing benchmark price [1]. Group 2: Industry Insights and Applications - Major companies such as Jingbo Petrochemical, Zhongtai International Trade, and Mingri Holdings actively participated in the first day of trading, utilizing the new futures for price hedging and risk management [2][3]. - Jingbo Petrochemical plans to use the monthly average settlement price for spot trading, which aligns with their monthly sales and average settlement model, helping to mitigate daily price fluctuations [2]. - Zhongtai International Trade employed the V2602F contract for long-term order hedging, enhancing stability in the PVC industry [3]. Group 3: Future Developments and Recommendations - The Dalian Commodity Exchange aims to optimize rules and improve market quality, making it easier for industry clients to participate and enhancing the pricing influence of Chinese chemical products [4]. - Market experts suggest that companies familiarize themselves with this innovative product, as it can significantly aid in business operations, especially in long-cycle average trading scenarios [3].

Group 1: Report Investment Rating - No information provided Group 2: Core Viewpoints - The listing of the monthly average price futures of three chemical products fills the gap in domestic average price risk management tools. The prices of polyethylene and polypropylene are in a bearish pattern, showing a trend of rising first and then falling, and the monthly average price will also show the same trend. PVC monthly average price futures are expected to operate in the bottom range [1][6][8] Group 3: Summary by Directory 1. New Product Listing - The monthly average price futures of linear low - density polyethylene, polyvinyl chloride, and polypropylene will be listed for trading starting at 21:00 on October 28, 2025, with night trading. The listing benchmark price is the settlement price of the corresponding contract on that day [1] 2. Continuation of the Bearish Pattern in Plastics and Polypropylene - The decline in plastic and polypropylene futures prices is driven by three factors: weak cost support, new supply capacity release, and insufficient demand. The prices have been in a downward trend since late November and early December 2024, with a short - term rebound in the middle. In the fourth quarter, the supply - demand pressure of polyethylene and polypropylene is difficult to ease, and the prices are expected to rise first and then fall. The recommended strategies include short - selling at high levels, inter - period arbitrage (long L2602F and short L2604F; long PP2602F and short PP2604F), and different delivery method arbitrage (long L2602F and short L2602; long PP2602F and short PP2602) [3][4][6] 3. PVC Monthly Average Price Futures May Operate in the Bottom Range - PVC is in a pattern of high supply and low demand, with continuous inventory accumulation and high social inventory. The supply pressure is still large, and the production is expected to increase in the fourth quarter. The domestic demand is insufficient, and the export may face pressure due to anti - dumping policies. It is expected that the monthly average price futures will operate in the bottom range [7][8]

Core Insights - The Dalian Commodity Exchange has officially listed monthly average futures for linear low-density polyethylene, polyvinyl chloride, and polypropylene as of October 28, increasing the total number of futures tools to 26, with 10 in the chemical sector [1][3] Group 1 - Monthly average futures are contracts settled based on the average price of the underlying asset over a month [3] - The introduction of these three chemical monthly average futures meets the growing market demand for refined risk management tools due to frequent price fluctuations in plastic chemical products [3] - This listing marks a historic breakthrough in the construction of the Dalian Commodity Exchange's chemical derivatives system, enhancing its ability to serve the real economy [3]

Core Viewpoint - The launch of monthly average futures for linear low-density polyethylene, polyvinyl chloride, and polypropylene at Dalian Commodity Exchange marks a significant development in China's petrochemical industry, providing diversified risk management tools and enhancing the integration of the industry with the futures market [1][2][6]. Industry Insights - The introduction of monthly average futures is expected to address the increasing demand for flexible and efficient pricing tools in the petrochemical sector, which is crucial for managing price volatility and supporting high-quality industry development [4][5]. - The new futures products will help establish a transparent and fair monthly average pricing signal system, aligning with international pricing practices and enhancing China's influence in global plastic trade [5][6]. Market Development - The Dalian Commodity Exchange has expanded its futures offerings to 26 products, with 10 specifically in the chemical sector, reflecting a robust development of its derivatives system and an enhanced capacity to serve the real economy [6]. - The launch of these futures is seen as a strategic move to improve the competitiveness of Chinese enterprises in the market economy and to foster deeper cooperation between the exchange and the petrochemical industry [2][3].

Core Viewpoint - The introduction of monthly average price futures for three chemical products fills a gap in domestic average price risk management tools, facilitating smoother price fluctuations and better risk management for enterprises in international trade [4][5]. Group 1: Monthly Average Price Futures - The monthly average price futures for linear low-density polyethylene, polyvinyl chloride, and polypropylene will be listed for trading starting from October 28, 2025, with night trading sessions [5]. - The listing benchmark prices for the contracts are based on the settlement prices on the listing date [5][7]. Group 2: Market Trends for Polyethylene and Polypropylene - The bearish trend for plastic and polypropylene futures continues, driven by declining cost support, new supply capacity, and insufficient demand [8]. - The price decline began in late November to early December 2024, with significant inventory accumulation during the Spring Festival and subsequent destocking cycles [8]. - Despite a rebound in oil prices, the prices of plastic and polypropylene futures face technical pressure and have entered a downward trend again by the end of August [8]. Group 3: Supply and Demand Dynamics - For polyethylene, rapid growth in domestic production due to capacity expansion is expected to persist throughout the year, with seasonal demand peaks in October [9]. - In polypropylene, while there is still strong demand in October, the seasonal demand decline is anticipated in November and December, with new capacity pressures expected to ease in the fourth quarter [9]. - Overall, both polyethylene and polypropylene prices are expected to remain in a bearish market, with short-term support from demand and geopolitical factors, but fundamental supply-demand pressures will likely lead to a "rise then fall" price trend [9]. Group 4: PVC Market Analysis - The PVC market is characterized by high supply and weak demand, with social inventory at historical highs [13]. - Despite ongoing losses in the PVC industry, some manufacturers are increasing production, with a projected increase of 220,000 tons this year [16]. - The PVC market faces potential export pressures due to anti-dumping measures from India, which could significantly impact future exports [17][18].

Report Information - Report Title: Monthly Average Price Futures Listing Strategy Report - Valuation Differentiation, Focus on Opportunities in the Strength and Weakness between Varieties [1] - Report Date: October 28, 2025 [1] - Analysts: Zhang Kexin, Wang Junlong, Lin Jing [1] Report Industry Investment Rating - No relevant content provided. Core Views of the Report - **Valuation Range**: Assuming Brent crude oil is at $60 - 70 per barrel, the lower marginal prices for PP, PE, and PVC are approximately 6,350 yuan/ton, 6,500 yuan/ton, and 4,650 yuan/ton respectively; the upper marginal prices are about 7,000 yuan/ton, 7,350 yuan/ton, and 5,150 yuan/ton respectively [7]. - **Driving Forces**: Polyolefins have both supply and demand increasing, while PVC demand is weak. Combining the balance sheets, PE has a better outlook. In the fourth quarter, PE is in a tight - balance state, while PP and PVC may experience inventory accumulation [8]. - **Contract Selection**: Considering liquidity, it is recommended to prioritize the PP2602F/L2602F/V2602F contracts [9]. - **Unilateral Strategy**: The listing benchmark prices of PP2602F/L2602F/V2602F are 6,673 yuan/ton, 7,002 yuan/ton, and 4,774 yuan/ton respectively. PP is slightly over - valued, PE is neutrally valued, and PVC is under - valued. In the short - term, it is recommended to wait and see [10]. - **Hedging Strategy**: For the L2602F - PP2602F spread, it is recommended to widen the spread on dips, with a reference range of 200 - 600 yuan/ton. PVC is not recommended for hedging for now [11]. Summary by Directory Core Points and Strategies - **Valuation Range**: Based on Brent crude oil at $60 - 70 per barrel, export and import profit formulas, and cost calculations, the lower and upper marginal prices of PP, PE, and PVC are estimated [7]. - **Driving Forces**: Polyolefin supply has a year - on - year growth rate of over 10%, PVC supply grows by about 6%. PP demand grows by about 5.8%, PE demand is supported by the peak season of greenhouse films, while PVC demand is dragged down by the real estate sector. From the balance sheets, PE is in a better position [8]. - **Contract Selection**: Due to liquidity considerations, the PP2602F/L2602F/V2602F contracts are recommended [9]. - **Unilateral Strategy**: Given the listing benchmark prices and market factors such as potential Sino - US trade agreements and rising oil prices, it is recommended to wait and see in the short - term [10]. - **Hedging Strategy**: Widen the L2602F - PP2602F spread on dips, and do not recommend PVC for hedging currently [11] Valuation Differentiation - **Production Profits**: PP, PE, and PVC production profits show different trends and levels in different production methods and time periods, with PVC production in a loss state and the integrated profit of caustic soda - PVC slightly in the red [14][21][30]. - **Price Spreads between Varieties**: The price spreads between L - PP, L - PVC, and PP - PVC show different trends over the years, providing potential trading opportunities [36] Polyolefins Supply and Demand Increase, PVC Demand is Weak, PE has a Better Outlook from the Balance Sheet - **Supply and Operating Rates**: The monthly production and operating rates of PP, PE, and PVC show different trends over the years. PP and PE supply is expected to increase, while PVC supply growth is relatively slower [46]. - **Downstream Operating Rates**: The downstream operating rates of PP, PE, and PVC also show different trends, with PVC downstream operating rates affected by the real estate market [59][69]. - **PVC Exports**: India's anti - dumping tax on PVC has been implemented, but the impact on export data has not yet been reflected [75]. - **Demand**: The real estate market data such as housing completion, new construction, and sales area show a downward trend, which has a negative impact on PVC demand [83]. - **Inventory**: The inventories of PP, PE, and PVC show different trends, with PVC inventory potentially increasing [90][99]. - **Balance Sheets**: The balance sheets of PP, PE, and PVC show different supply - demand relationships in different months, with PE in a relatively better position in the fourth quarter [107][110][112]

Core Viewpoint - The upcoming launch of monthly average futures for linear low-density polyethylene, polyvinyl chloride, and polypropylene is expected to provide more precise hedging tools for companies, addressing pricing and hedging misalignments, and promoting a more stable and resilient plastic industry in China, especially amid significant growth in production capacity and exports [1] Market Application and Demand - The average pricing model has established a foundation in the plastic industry, particularly in long-term trade agreements and stable supply chain collaborations, with increasing adoption [2] - The global plastic industry has a pressing need to smooth price volatility risks and stabilize trade costs, leading to the widespread use of average pricing models in international trade [2][3] - The demand for stable pricing models has intensified due to geopolitical factors, oil price fluctuations, and supply-demand structure adjustments, making the launch of monthly average futures timely [3][5] Risk Management and Pricing Stability - Monthly average futures can alleviate the impact of daily price volatility, allowing companies to focus on long-term production planning and cost control, which is a pressing need for the industry [4] - The introduction of monthly average futures is expected to complement existing pricing models, enabling production companies to manage price risks more accurately and enhancing China's role in shaping international trade pricing rules [4][8] Export Growth and International Trade - China's polypropylene export volume has significantly increased from 430,000 tons in 2020 to an expected 2.35 million tons in 2024, indicating a sustained growth trend [5] - The expansion of China's plastic export scale highlights the potential application of monthly average futures in cross-border trade, facilitating a transition from "price following" to "price setting" [5][6] - The combination of monthly average futures with hedging tools can create a comprehensive risk management solution for companies facing price and exchange rate fluctuations in export markets [6][7] Global Pricing Influence - The launch of monthly average futures is seen as a key to establishing a fair pricing benchmark that aligns with international average trade practices, enhancing the efficiency of cross-border transactions [7][8] - If widely adopted, monthly average futures could lead to the formation of a new international pricing node based on "China's monthly average futures," significantly enhancing China's international pricing power in the plastic industry [8]