Report Industry Investment Rating No relevant information provided. Core View of the Report The LPG market is expected to maintain a relatively strong pattern. The price of PG mostly follows the fluctuations of external propane and crude oil. In the short term, the external market is tight, but there is still supply pressure in the medium to long term. The domestic market is relatively stronger than the external market and crude oil, which is related to the low domestic arrivals and strong chemical demand. The near - term trading logic is supported by supply contraction and stable chemical demand, but the overall valuation is high. The long - term trading outlook is affected by supply and demand factors in different regions [2][3][6]. Summary by Relevant Catalogs Chapter 1: Core Contradictions and Strategy Recommendations 1.1 Core Contradictions - Cost - end crude oil is affected by supply surplus pressure and geopolitical issues, showing an overall oscillatory upward trend this week [2]. - The CP prices in December are in line with expectations, with propane at $495/ton (+20) and butane at $485/ton (+25) [2]. - US propane demand has improved significantly in the past two weeks, better than the same period last year, but the inventory reduction is not large [2]. - The domestic fundamentals are relatively stable, with low arrivals this week, matching the shipments from the Middle East and the US to China. Chemical demand remains strong in the short term, and the PDH operating rate is expected to be maintained at 70% - 75% [2]. - There are many purchase requests in the external market recently, with the FEI premium strengthening to $30 and the CP premium slightly dropping to $25 [2]. 1.2 Trading - Type Strategy Recommendations - **Market Positioning**: The market is expected to oscillate, with the PG01 price range at 4000 - 4500 [11]. - **Basis Strategy**: The basis is expected to oscillate. This week, the futures price declined with the overall chemical market, while the spot price rose slightly, leading to a stronger basis [11]. - **Calendar Spread Strategy**: Sell the spread when the spread is high [11]. - **Hedging Arbitrage Strategy**: Narrow the internal - external price spread, and wait and see on widening the PP/PG price ratio [11]. 1.3 Industrial Customer Operation Recommendations - **LPG Price Range Forecast**: The monthly price range of LPG is predicted to be 4000 - 4500, with the current 20 - day rolling volatility at 19.57% and the historical percentage of the current volatility in the past 3 years at 24.83% [13]. - **LPG Hedging Strategy**: For inventory management, when the inventory is high, short PG futures and sell call options. For procurement management, when the inventory is low, buy PG futures and sell put options [13]. Chapter 2: This Week's Important Information and Next Week's Attention Events 2.1 This Week's Important Information - **Positive Information**: The fundamentals remain relatively strong, with continuous low arrivals and inventory reduction at ports. The external market is tight, and the FEI premium has risen to $30 [18]. - **Negative Information**: From the perspectives of internal - external price spread and PG/PP price ratio, the overall valuation is still not cheap [15]. 2.2 Next Week's Important Events to Monitor - The Politburo meeting and the Central Economic Work Conference will be held [16]. Chapter 3: Market Interpretation 3.1 Price - Volume and Capital Interpretation - **Domestic Market** - **Unilateral Trend and Capital Movement**: The PG01 contract oscillated upward this week. The net positions of major profitable seats increased slightly, and there were no obvious changes in the top 5 long and short positions in the order book. The net short positions of a certain seat decreased slightly, while the net long positions of foreign capital increased slightly and those of retail investors decreased slightly. Technically, the PG01 is in an oscillatory state, with resistance at 4400 - 4500 and support at around 4250 on the daily - line middle track [19]. - **Basis and Calendar Spread Structure**: The LPG term structure remains in a BACK structure, with the 1 - 2 calendar spread at 79 yuan/ton (+3) [22]. - **External Market** - **Unilateral Trend**: FEI M1 closed at $524/ton (-13), with a premium of +30 dollars/ton; CP M1 closed at $504/ton (+3), with a premium of +25 dollars/ton; MB M1 closed at $375/ton (+19). The FEI swap declined slightly this week, but the premium strengthened, and the spot price remained stable. The MB price rose after the demand increased [26]. - **Calendar Spread Structure**: The FEI M1 - M2 spread was 13 dollars/ton (-6.75); the CP M1 - M2 spread was 0.5 dollars/ton (-0.5); the MB M1 - M2 spread was 6.19 dollars/ton (+2.93) [32]. - **Regional Spread Tracking**: This week, FEI was in an oscillatory state, while MB and CP were relatively strong. The FEI - MB and FEI - CP spreads narrowed slightly. In addition, the spread between FEI and MOPJ decreased, improving the economic efficiency of FEI [35]. Chapter 4: Valuation and Profit Analysis 4.1 Upstream and Downstream Profit Tracking - **Upstream Profit**: This week, the gross profit of major refineries was 593 yuan/ton (-28), and that of Shandong local refineries was 232 yuan/ton (+29). The profit fluctuations were not large [38]. - **Downstream Profit**: The PDH profit calculated by FEI was - 350 yuan/ton (+80); the PDH profit calculated by CP was - 505 yuan/ton (+47), and the PDH profit continued to be in a loss state. The MTBE gas - fractionation profit was - 62.50 yuan/ton (-5), and the isomerization profit was - 51 (+25). The alkylation oil profit was - 412 yuan/ton (+12), and the recent profit fluctuations were not large [41]. 4.2 Import - Export Profit Tracking This week, the external market price strengthened, while the domestic imported gas price oscillated relatively, leading to a weaker import profit [44]. Chapter 5: Supply, Demand, and Inventory 5.1 Overseas Supply and Demand - **US Supply and Demand** - **EIA Weekly Supply and Demand**: As the weather gets colder, the weekly demand has improved significantly in the past two weeks, but the production is generally high, and the inventory has decreased slightly [49]. - **KPLER Export Situation**: From January to November, the US exported a total of 62,703 kt of LPG, a year - on - year increase of 3.09%. Among them, the exports to China were 9,693 kt, a year - on - year decrease of 40% [56]. - **Middle East Supply**: From January to November, the Middle East exported a total of 44,850 kt of LPG, a year - on - year increase of 2.88%. Among them, the exports to India were 19,238 kt, a year - on - year decrease of 1.55%, and the exports to China were 16,833 kt, a year - on - year increase of 27%. In November, the domestic demand in the Middle East was strong, and the shipments were generally low [60]. - **India Supply and Demand**: From January to October, India's LPG demand totaled 30,101 kt, a year - on - year increase of 6.26%, and the LPG imports were 21,048 kt, a year - on - year increase of 7.49%. The second half of the year is the seasonal peak season in India, and the demand and imports remain high [63]. - **South Korea Supply and Demand**: The seasonality of South Korea's LPG demand is not obvious. Most of it is used for the chemical industry. From May to September, South Korea's LPG imports remained high. There was some re - export demand in May and June, and the propane cracking profit was better than that of naphtha from July to September, providing support for the cracking end. Currently, the propane cracking profit is still better than that of naphtha, and the imports are expected to remain relatively high. Some cracking maintenance has been extended to December, and the cracking cost - effectiveness of LPG has decreased. In November, South Korea's LPG imports increased slightly compared with October but remained at a relatively low level [70]. - **Japan Supply and Demand**: Japan is highly dependent on imported LPG, and the proportion of combustion demand is large, so the seasonality of demand and imports is obvious. As the weather gets colder, the imports are expected to increase. After restocking in August, the imports decreased in September, and the imports in August and September were neutral overall. The imports increased again in October. Normally, from November to February of the next year, the average monthly import volume is about 1,000 kt [78]. 5.2 Domestic Supply and Demand - **Domestic Supply - Demand Balance**: In the case of high refinery profits, the domestic LPG production is expected to remain high, but the overall external supply volume is not high. The import volume is not high according to the shipping data. Based on profit and seasonality, chemical demand decreases, and combustion demand increases. The overall chemical demand in the fourth quarter is better than expected. The overall inventory has decreased slightly, mainly at the port [82]. - **Domestic Supply**: The operating rate of major refineries is 74.66% (-0.88%); the operating rate of independent refineries is 56.11% (+1.12%), and the utilization rate excluding large - scale refineries is 52.20% (+1.25%). The domestic LPG external sales volume is 51.72 tons (+0.18). The port arrivals this week are 55.8 (-10.2), the factory inventory is 15.74 tons (-0.12), and the port inventory is 274.59 tons (-20.79) [85]. - **Domestic Demand** - **PDH Demand**: Juzhengyuan is restarting. This week, Hebei Xinxinyuan, Ningbo Haode, and Bengu New Materials are still under maintenance. The internal - external price spread has narrowed [95][97]. - **MTBE Demand**: No specific new demand information is provided, but relevant seasonal data on the operating rate and price spread are presented [98]. - **Alkylation Oil Demand**: Puyang Shengyuan has resumed production, and Shandong Linfeng is still under maintenance [103]. - **Combustion Demand**: Seasonal data on the production - sales ratio in different regions are presented [108].