Core Viewpoint - The listing of propylene futures and options on the Zhengzhou Commodity Exchange enhances the variety of the domestic futures market and provides significant changes for the propylene industry chain [1][3]. Industry Overview - Propylene is a crucial basic chemical product and the largest olefin variety in China, with a projected apparent consumption of 55.36 million tons and a market size of approximately 384.5 billion yuan in 2024 [1]. - The propylene industry features active trade, convenient storage, and broad demand, which will be better supported by the new futures and options [3]. Market Dynamics - The listing of propylene futures and options will meet the diverse needs of various market participants, enhancing market liquidity [3]. - Upstream producers can lock in production profits through selling hedges, while downstream companies can secure low raw material prices through buying hedges [3]. Risk Management - The new financial instruments will provide richer risk management tools for industry chain enterprises, enhancing resilience and supporting high-quality development [3][4]. - The introduction of these products is expected to improve the health of the national propylene industry chain by offering effective inventory valuation and processing range hedging tools [4]. International Trade - Domestic propylene companies are actively expanding into overseas markets, but they often rely on less representative and transparent foreign pricing sources [4]. - The new futures and options are anticipated to enhance the international influence of Chinese propylene prices, thereby improving trade efficiency for domestic enterprises [4]. Tool Diversification - The availability of both futures and options allows for more refined risk management, catering to the diverse and personalized needs of enterprises [4].

1. Report Industry Investment Rating - No information provided regarding the report industry investment rating. 2. Core Viewpoints of the Report - On May 30, the Zhengzhou Commodity Exchange solicited public opinions on propylene futures and options contracts and futures business rules, and propylene futures and options are about to be listed for trading. The listing will connect the olefin industrial chain, enabling futures and options linkages between raw materials, propylene, and downstream products, facilitating industrial chain hedging for enterprises [2]. - As an important intermediate product in the chemical olefin industrial chain, propylene allows upstream and downstream enterprises to use futures and options tools to effectively manage price - fluctuation risks, optimize production and operation decisions, enhance China's pricing influence in the chemical industry, and promote high - quality industry development [2]. 3. Summary by Relevant Catalogs 3.1 Propylene Basics - Propylene is a colorless, odorless, slightly sweet, and extremely flammable gas with a low explosion limit (2% - 11.1%). It has low solubility in water but is soluble in organic solvents such as ethanol and ether. It is mainly used to produce polypropylene and can also synthesize chemicals like acrylonitrile, propylene oxide, etc., with wide applications in plastics, medicine, and agriculture [4]. - Propylene, as a hazardous chemical, has high requirements for transportation and storage. It is mainly transported by pipelines, tank trucks, and ships. In China, most propylene is transported over short distances within regions. Storage usually uses pressure storage tanks or steel cylinders [6]. 3.2 Main Production Processes and Upstream - Downstream Industrial Chain of Propylene - The main production processes of propylene include catalytic cracking, steam cracking, coal/methanol - to - olefins (CTO/MTO), and propane dehydrogenation to olefins (PDH). The traditional processes of crude oil catalytic cracking and naphtha steam cracking have drawbacks such as low propylene yield and high energy consumption [7]. - The coal - to - olefins process can achieve clean and efficient use of coal resources and reduce dependence on petroleum resources. The propane dehydrogenation process has advantages such as high propylene yield and a short process flow. As of March 2025, the production capacities of catalytic cracking, steam cracking, PDH, and coal - based processes were 1229, 2246, 2410, and 1261 million tons, accounting for 17%, 31%, 34%, and 18% respectively [8]. - In China's propylene downstream consumption, polypropylene accounts for the largest proportion (about 70.3%), followed by acrylonitrile and propylene oxide (about 6.9%), butyl octanol (6.7%), acrylic acid (3.9%), and other chemicals (about 5.3%) [11]. 3.3 Overview of Propylene Supply - Demand Pattern - As of 2024, China is the world's largest producer and consumer of propylene, with its production capacity accounting for about 41.2% of the global total. From 2023 to 2024, China's propylene production capacity increased by 664 million tons to 6973 million tons (a growth rate of 10.5%), production increased by 558.35 million tons to 5340.67 million tons (a growth rate of 11.6%), and apparent consumption increased by 516.94 million tons to 5535.4 million tons (a growth rate of 10.3%) [12][13]. - China's propylene imports have been declining. In 2024, imports were 201.8 million tons, a 35.5% decrease from the peak of 312.7 million tons in 2019. South Korea, Japan, and China's Taiwan region are the main import sources, accounting for 73.8%, 18.5%, and 1.2% respectively in 2024 [16]. - The East China region is the largest propylene production and consumption area in China, with Shandong being the largest propylene - producing province, accounting for about 20% of the national capacity. The Northwest region has a large supply of coal - based polypropylene. The consumption areas and main production areas of propylene are basically the same [19][20]. 3.4 Introduction to Propylene Futures and Options Contracts - On May 30, the Zhengzhou Commodity Exchange solicited public opinions on propylene futures and options contracts and futures business rules, and released the draft contracts. The propylene options contract has details such as contract type (call and put options), trading unit (1 lot of propylene futures contract), and other specifications [21][24]. - Propylene uses warehouse standard warehouse receipts and factory - warehouse standard warehouse receipts for delivery. The position limits are 2000 lots in normal months, 500 lots in months approaching delivery, and 50 lots in the delivery month [25].

Core Viewpoint - The Zhengzhou Commodity Exchange is seeking public opinion on the futures and options contracts for propylene, indicating the imminent launch of these financial instruments in China, which is the largest producer of olefins [1][3]. Industry Overview - Propylene is a crucial basic chemical that connects various upstream raw materials such as crude oil, naphtha, coal, methanol, and propane, and has extensive applications in textiles, cosmetics, and home appliances [3]. - In the chemical fiber industry, propylene can be polymerized to produce polypropylene, which is used to manufacture polypropylene fibers. These fibers are lightweight, strong, corrosion-resistant, and recyclable, with expanding applications in ropes, fishing nets, safety belts, and packaging materials, as well as significant market potential in textiles like bedding, clothing, and carpets [3]. - The market for polypropylene products is expected to grow significantly, especially under the "dual carbon" goals promoting low-carbon and recyclable products [3]. Market Dynamics - The propylene industry faces structural overcapacity and is undergoing a transformation towards high-end and green development, leading to a strong demand for risk management tools among industry chain enterprises [3][6]. - The introduction of propylene futures and options will provide pricing and risk management tools for upstream and downstream enterprises, enhancing China's pricing influence in the chemical industry and promoting high-quality development in the propylene sector [3][6]. Futures and Options Details - The futures contract for propylene will have a trading code of PL, with a trading unit of 20 tons per contract, a minimum price fluctuation of 1 yuan per ton, and a daily price fluctuation limit of ±4% based on the previous day's settlement price [4]. - The minimum trading margin will be 5% of the contract value, with delivery months from January to December, and the last trading and delivery days set for the 10th and 13th trading days of the delivery month, respectively [4]. - The delivery standards specify that the benchmark delivery product must meet the national standard for polymer-grade propylene, with specific water content requirements [4][5]. Risk Management and Participation - Propylene futures will utilize warehouse and factory standard warehouse receipts for delivery, ensuring efficiency and flexibility for industry clients [5]. - The position limits are set at 2000 contracts for regular months, 500 contracts for the month before delivery, and 50 contracts for the delivery month, reflecting the design of the contract rules to accommodate the actual characteristics of the spot market [6].