1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report - The upstream situation shows that the escalating Middle - East situation boosts a significant rebound in oil prices. The actual production of OPEC+ is lower than its claimed output. The strong gold under currency depreciation and the complex geopolitical situation still support oil prices. - In terms of supply, after the tariff reduction, China is expected to actively replenish stocks. The market has been actively seeking third - party import substitutes for the US market gap, increasing potential supply. The domestic production volume has decreased marginally and is still lower than last year's level. The price of competing product LNG is basically the same as that of LPG, and the shipping freight has rebounded from a low level. - Regarding inventory, the inventory continues to decline. The port storage capacity utilization rate has dropped to a low level in recent years. The refinery storage capacity utilization rate is at the lowest level in the same period over the years, while the gas station storage capacity utilization rate is relatively high. The port inventory has decreased. - For demand, the macro - demand is weak. The combustion demand is in the off - season, gasoline consumption is at a four - year low, and although the catering consumption is okay, it will be affected by the new policy of banning public - funded eating and drinking in the coming months. The chemical demand has rebounded. The weekly capacity utilization rate of PDH continues to rebound but is still at the lowest level in the multi - year range, and the gross profit has declined again. The capacity utilization rate of alkylation has rebounded to a high level in recent years, but the gross profit has deteriorated. The capacity utilization rate of MTBE has rebounded, with a large loss. The "gas/oil" price ratio has dropped to a level close to that of the same period last year. - The strategy is that LPG is expected to mainly fluctuate in a wide range. Long positions should be held, with a support level of 4200. [5] 3. Summary According to Relevant Catalogs 3.1 Main Views - Upstream factors such as the Middle - East situation and OPEC+ production affect oil prices, which in turn influence LPG. - Supply is affected by tariff reduction, import substitution, and domestic production volume. - Inventory is decreasing across different sectors. - Demand has different trends in combustion and chemical aspects. - The recommended strategy is to hold long positions with a given support level. [5] 3.2 Periodic and Spot Market - The "gas/oil" price ratio of LPG has large fluctuations and seasonal patterns. The spot "gas/oil" price ratio has dropped. After the tariff reduction, inventory replenishment is expected, and the arrival situation later needs attention. - The LPG price is highly correlated with crude oil. The spot price has been fluctuating since Q4 2023 and recently declined weakly, with a smaller rebound than the futures price. - The basis has large fluctuations, with seasonality, regional differences, and a large discount for the expiration month of warehouse receipts. - The 3 - 4 month spread in Q1 this year turned into a back structure, and the 9 - 10 month spread has recently increased. - The price of LNG is basically the same as that of LPG, and the international frozen cargo price has rebounded slightly. [9][10][16][21][28] 3.3 Inventory - The overall inventory of LPG in China continues to decline. The port storage capacity utilization rate is at a low level in recent years, the refinery storage capacity utilization rate is at the lowest in the same period over the years, and the gas station storage capacity utilization rate is relatively high. The port inventory has decreased. - The warehouse receipts have increased significantly and are at a historical high. [32][44] 3.4 Supply End - The import and export volume of LPG in China is an important part of the supply. - The domestic production volume of LPG is lower than the same period in previous years and is expected to decline with the improvement of refinery device integration. - The shipping freight has rebounded from a low level, driven by the inventory replenishment demand in the shipping industry after the easing of the tariff war. - The import gross profit has its own characteristics and trends. [67][65] 3.5 Demand End - In 2024, the PDH capacity continued to grow at a high speed of 25%. Although PDH is in a loss state, the capacity expansion still drives a large increase in LPG demand. - The demand for gasoline addition is weak, and the household combustion demand is decreasing. The commercial combustion demand growth rate has declined and is expected to face pressure next year. The increasing penetration rate of new - energy vehicles accelerates the substitution of gasoline addition demand. - The capacity utilization rate of MTBE has rebounded to a high level, the alkylation capacity utilization rate is similar to previous years, and the PDH capacity utilization rate is at a multi - year low. - The profit of PDH is not good, which affects the operating rate. - The gasoline consumption is affected by new - energy vehicles, and the combustion demand of LPG is gradually shrinking. The catering demand has recovered strongly in recent years. [76][80][87][98][101]