1. Report Industry Investment Rating - Not provided in the content 2. Core View of the Report - After the holiday, A-shares are likely to have a restorative rebound. Asset shortage and weak economy are beneficial to bond futures, but the central bank has indicated interest rate risks in the short term. The macro situation during the holiday is favorable for the market, and the prices of various commodities have different trends [1]. 3. Summary by Related Catalogs Macro Finance - **Stock Index**: Before the holiday, the A-share market adjusted significantly due to the rise of risk aversion. During the holiday, the Hong Kong stock market rebounded, and technology sectors such as AI and robotics attracted wide attention. It is expected that A-shares will have a restorative rebound after the holiday [1]. - **Treasury Bonds**: Asset shortage and weak economy are beneficial to bond futures, but the central bank has indicated interest rate risks in the short term. Attention should be paid to the interest rate decision of the Bank of Japan [1]. Non-ferrous Metals - **Copper**: The macro situation during the holiday is favorable for the market, and the copper price may fluctuate strongly in the short term [1]. - **Aluminum**: The macro situation is mixed, and the aluminum price will fluctuate in the short term. The operating capacity of domestic alumina has decreased, and there are disturbances in the supply of a large alumina enterprise in North China. Attention should be paid to the opportunity of going long at a low price [1]. - **Zinc**: The negotiation between the United States and Iran has reached a deadlock, which has led to concerns about the supply of Iranian zinc mines and supported the zinc price in the short term. Attention should be paid to the resumption of production of downstream enterprises after the holiday [1]. - **Nickel**: The LME nickel price rose slightly during the holiday. Although the tailings landslide in the Indonesian QMB project has limited actual impact, there are still concerns about nickel ore supply. The nickel price will fluctuate strongly in the short term and is still affected by the resonance of the non-ferrous metal sector. Attention should be paid to changes in Indonesian policies and macro sentiment. In the long term, the high global nickel inventory may still have a suppressing effect. It is recommended to pay attention to the opportunity of going long at a low price and control risks [1]. - **Stainless Steel**: The raw material nickel-iron price remains firm, the spot transaction of stainless steel is weak, the social inventory has increased slightly, and the steel mills' maintenance and production reduction have increased in February. The stainless steel futures will fluctuate strongly. Attention should be paid to the demand recovery after the holiday. It is recommended to go long at a low price in the short term and control risks [1]. - **Tin**: The uncertainty of recent macro events is relatively large. Under the influence of US tariffs and geopolitics, the short-term volatility of the tin price may increase. Although the long-term trend of the tin price remains unchanged, investors are advised to pay attention to risk management and profit protection in the short term [1]. - **Precious Metals**: The judgment of the Supreme Court that the "IEEPA tariff" is illegal and Trump's new tariff policy have intensified market concerns about uncertainty. Coupled with the escalation of the geopolitical tension between the United States and Iran, the demand for hedging has supported the price of precious metals. The macro situation is favorable for platinum, and the balance expectation of palladium may improve, which may further support the palladium price in the short term [1]. Agricultural Products - **Palm Oil**: The data of Malaysian palm oil from February 1 to 20 showed a double decline in production and exports. The Malaysian palm oil market rebounded and then faced pressure during the holiday and is expected to fluctuate [1]. - **Soybean Oil**: The US soybean oil has risen under the influence of biodiesel and crude oil prices. The domestic soybean oil may open higher but lacks new driving forces for the time being. It is recommended to wait and see [1]. - **Rapeseed**: The ICE rapeseed rose slightly during the holiday and may be affected by US biodiesel and potential domestic import demand. Attention should be paid to the release of the EPA biodiesel policy and the anti-dumping arbitration announcement of Canadian rapeseed in China [1]. - **Cotton**: The domestic new cotton crop has a strong expectation of a bumper harvest, and the purchase price of seed cotton supports the cost of lint cotton. The downstream startup rate remains low, but the inventory of spinning mills is not high, and there is a rigid demand for replenishment. The cotton market is currently in a situation of "having support but no driving force." Future attention should be paid to the tone of the No. 1 Central Document in the first quarter of next year regarding direct subsidy prices and cotton planting areas, the intention of cotton planting areas next year, weather during the planting period, and the peak demand season from March to April [1]. - **Sugar**: The global sugar market is in surplus, and the domestic new sugar supply is increasing. The short-selling consensus is relatively consistent. If the price continues to fall, there will be strong cost support below, but the short-term fundamentals lack continuous driving forces. Attention should be paid to changes in the capital market [1]. - **Corn**: After the holiday, attention should be paid to the selling pressure of on-the-ground grain in the production areas. However, the quality of Northeast grain is relatively dry this year, and the selling pressure is expected to be limited under the support of the rigid replenishment demand of the middle and lower reaches. In addition, attention should be paid to the release of policy grain and the implementation of import restrictions after the holiday. The overall expectation is to maintain range fluctuations [1]. - **Soybean Meal**: The US tariff policy has changed during the holiday, but the external market fluctuated little, which has limited guidance for the domestic soybean meal market. The Brazilian soybean premium has declined, and the soybean meal market is expected to fluctuate. Attention should be paid to Sino-US trade dynamics and Brazilian selling pressure in the near future [1]. - **Coniferous Pulp**: There is no obvious positive news for coniferous pulp during the Spring Festival. The previous positive factors on the supply side have basically faded. It is expected to fluctuate in the range of 5200 - 5400 in the short term. Attention should be paid to the port inventory after the holiday [1]. - **Log**: The spot price of logs has risen, the log arrivals in February have decreased, and the external quotation is expected to rise. The futures market has an upward driving force [1]. Energy and Chemicals - **Fuel Oil**: OPEC+ has suspended production increases until the end of 2026, the Middle East geopolitical situation is still uncertain, and the sentiment in the commodity market has cooled down. The short-term supply-demand contradiction is not prominent, and it follows the trend of crude oil [1]. - **Asphalt**: The raw material cost has strong support, the sentiment in the commodity market is changeable, the risk appetite of funds has decreased, the downstream demand has weakened before the holiday, and the basis difference has expanded to the high level of the same period [1]. - **Butadiene**: The cost end of butadiene has strong support, the overseas cracking device capacity has been cleared, which is beneficial to the long-term domestic butadiene export expectation. The profit of private cis-butadiene plants has remained in a loss state recently, and the expectation of maintenance and load reduction has increased. The downstream negative feedback has been gradually realized. The butadiene market is in a state of destocking, and the high inventory of cis-butadiene is still a potential negative factor. Attention should be paid to the inventory reduction of cis-butadiene before the Spring Festival and the trading performance of the butadiene market. The short-term market is expected to fluctuate widely, and the BR still has an upward expectation in the long term [1]. - **PX**: The PX-mixed xylene price difference has narrowed to $150, which is still enough to support PX manufacturers to purchase mixed xylene as raw materials. PX maintains fundamental resilience during the high-level correction, and there are still risks of crude oil prices due to the Iranian geopolitical risk. The downstream PTA industry continues to be strong, and the domestic PTA output in January is expected to reach a new high, and there is no plan to reduce production during the Spring Festival, and there is no new PTA production capacity throughout the year [1]. - **Ethylene**: The production profit rate of naphtha cracking has declined due to the rise in raw material prices. The price difference between ethylene and naphtha has reached $83. Several Korean ethylene producers plan to maintain the operating rate of their cracking devices in February. The ethylene glycol price is waiting at a low level [1]. - **Styrene**: The high inventory of pure benzene has weak import demand, and the price difference between the United States and Asia is $88, which is not enough to open the arbitrage window. The Asian styrene price and economic situation have recovered, mainly driven by supply tightening, unexpected shutdowns in the Middle East, surging export demand, and rising cost ends. The continuous strong export, short-term supply gap caused by domestic maintenance, and speculative buying driven by chemical futures support the firmness of the spot price [1]. - **Methanol**: Methanol is generally affected by the Iranian situation, and the future import is expected to decrease, but the downstream negative feedback is obvious. The leading MTO device has stopped, and some enterprises have reduced production, but the Fude plant restarted on January 25. The Iranian situation has eased, but the risk cannot be completely ruled out. The freight has risen due to the cold air in the inland area, and the inventory pressure of enterprises in the northwest has increased, and they have reduced prices to sell goods [1]. - **PVC**: In 2026, there will be less global production, and the differential electricity price in the northwest region is expected to be implemented, which will force the clearance of PVC production capacity. The future expectation is relatively optimistic, but the current fundamentals are poor, and the export rush has slowed down stage by stage [1]. - **LPG**: The CP price in February has risen, and the purchase in March is still relatively tight. The Middle East geopolitical conflict has cooled down, and the short-term risk premium has declined. The driving logic of the overseas cold wave has gradually slowed down, and the market expectation is weakening. It is expected that the basis will gradually expand. The domestic PDH operating rate has declined, and the profit is expected to recover seasonally. The short-term demand side of LPG is bearish, which suppresses the upward movement of the market. The port inventory has been continuously decreasing, but the domestic civil gas is relatively sufficient, showing a divergence between propane and PG [1]. Shipping - **Container Shipping**: The freight rate peaked and fell before the holiday. Airlines are still cautious about tentative resume flights. Airlines are expected to have a strong willingness to stop the decline and raise prices after the off-season in March [1].

Report Industry Investment Rating No relevant content provided. Core Viewpoints - The LPG substitution limit for naphtha in Asia is approximately 70 - 80 tons per month. If the LPG substitution volume continues to increase, the supply - demand gap for Asian naphtha in November may be temporarily filled, and attention should be paid to the probability of marginal weakening of naphtha under large - scale LPG substitution [1][33][40] - The escalation of the Sino - US trade conflict will affect the substitution volume of Chinese cracking units through increased costs, and the specific impact needs to be considered based on the direction of tariff policies [40] Summary by Directory 1. LPG Asian Price Rapidly Weakens - On September 30, Saudi Aramco announced the October CP price. Propane dropped by $25/ton to $495/ton, and butane dropped by $15 to $475/ton. The landed cost was about 4,259 yuan/ton for propane and 4,196 yuan/ton for butane, significantly lower than the previous market expectation of $520 - 530/ton. The CP decline led to a sharp drop in the overall Asian propane market [1][5] - During the National Day holiday, the FEI paper cargo dropped by about $30/ton, and the CP paper cargo dropped by nearly $50/ton. The significant weakening of C3 raw materials led to the weak performance of the post - holiday C3 industrial chain prices [5] 2. Propane Market Share Changes after Sino - US Tariff Game 2.1 China's Import Logistics Changes - After April this year, due to the mutual imposition of punitive tariffs between China and the US, China's LPG import logistics changed significantly. Before April 2025, US sources accounted for over 50% of China's LPG imports. After the tariffs, the volume of LPG imported from the US decreased sharply, and most of the supply gap shifted to the Middle East [6][9] 2.2 US Propane Flow Changes - As the US LPG gradually lost its market share in China, its flow became more diversified, directly impacting the North Asian and South Asian markets. The proportion of US exports to China decreased rapidly, while exports to Japan, South Korea, India, and South America increased significantly, showing a more decentralized logistics characteristic [10][12] 2.3 Indian Market Game - The significant drop in Saudi Aramco's CP official price is reported to be for competing for the South Asian market share. India's LPG import pattern has changed from almost solely relying on the Middle East to mainly sourcing from the Middle East with a gradually increasing US share. In 2025, the US - India energy cooperation framework was reached, and in August, due to the US threatening India over its purchase of Russian crude oil, India increased its purchase of other US energy forms as a compromise [13][16][17] - The Middle East is expected to increase LPG production in the future. With the need to digest the incremental supply and considering the future large - scale launch of US export terminal facilities, a price war seems inevitable [17] 3. Impact of "Low - price" LPG on the Energy - Chemical Industry Chain - The significant drop in LPG prices led to a rapid decline in the prices of the entire C3 industrial chain (on the futures market). The previous large - scale losses of PDH plants have been effectively improved, and the expected operating rate of PDH is likely to increase, which in turn caused the prices of downstream polypropylene products (including propylene oxide, acrylonitrile, etc.) to drop rapidly [19] - The decline in LPG prices also affects the price of naphtha, the central pricing factor for this year's chemical products. After the price drop, Asian petrochemical plants' willingness to purchase LPG has rapidly increased [19] 4. Essence of Ethylene Cracking Raw Material Substitution 4.1 Process Basis for Raw Material Substitution - Ethylene cracking furnaces can be divided into gas cracking furnaces, liquid cracking furnaces, and gas - liquid homogeneous cracking furnaces. When discussing propane substitution in ethylene cracking, it involves two issues: increasing the load of existing cracking furnaces and directly switching raw materials in gas - liquid homogeneous cracking furnaces. The latter has more options for raw material substitution, but the downstream processing capacity limits the degree of raw material substitution [25] 4.2 Ethylene Raw Material Structure and Substitution in Asian Regions - Japan and South Korea are the main Northeast Asian countries that purchase ethylene cracking raw materials externally, and their external naphtha purchases account for nearly 40% of the total in Asia. They are often the vanguards for raw material switching in the Asian market. Currently, LPG accounts for about 20% of the ethylene cracking raw materials in Japan and South Korea, equivalent to an LPG usage of 835 tons per year. With a 20% overload, it is about 170 tons more per year, equivalent to an economic substitution of about 10 - 20 tons per month [26][28] - China and Southeast Asia have a larger proportion of ethylene production capacity. China's ethylene cracking raw material structure mainly includes traditional naphtha/LPG cracking, light hydrocarbon cracking, and MTO. In traditional cracking processes, the ratio of naphtha to LPG is generally 8:2. The maximum LPG usage through overload substitution in China's traditional ethylene cracking capacity is about 30 tons per month, and in Southeast Asia, it is about 20 - 25 tons per month [31] 5. Historical Back - testing and Impact on Naphtha 5.1 Historical Back - testing - The LPG substitution limit for naphtha in Asia is approximately 70 - 80 tons per month. With the recent significant drop in LPG prices, the profit gap between the two has widened, and the economic viability of using LPG in cracking units has increased significantly [33] - Historically, in some extreme situations (such as October 2021, March - April 2022), the monthly LPG substitution volume could reach about 80 tons. Whether this substitution volume will change the fundamentals of naphtha this year remains to be seen [37] 5.2 Impact on Asian Naphtha Supply and Demand - The recent drop in LPG prices will lead to significant substitution of cracking raw materials in Asia. Previously, the high E/W price spread of Asian naphtha has led to a historical high in East - West arbitrage logistics. Meanwhile, the overall demand of downstream ethylene cracking has been weaker than expected due to deep losses and seasonal maintenance. If the LPG substitution volume continues to increase, the supply - demand gap for Asian naphtha in November may be temporarily filled, and attention should be paid to the probability of marginal weakening of naphtha [37] 6. Escalation of Sino - US Trade War and Ship Control - According to the latest US port - calling fee policy for Chinese - related ships, ethane and propane ships need to pay a $50/ton berthing fee at US ports. This will directly increase the cost of importing ethane and propane. For ethane, the impact on domestic raw material selection is not significant for now, but for US - imported propane, it may significantly affect the substitution volume between propane and naphtha in China. However, since China's proportion of purchasing US propane has decreased, the specific impact needs further consideration [39] 7. Summary - From the perspective of the raw material structure in Asia, the LPG substitution limit is about 80 tons per month. If this substitution volume acts on the currently weakening Asian naphtha supply - demand situation, it may fill the supply - demand gap in November and lead to a short - term supply - demand inflection point [40] - In addition to the economic factors of LPG substitution, the recent escalation of the Sino - US trade conflict will also affect the substitution volume of Chinese cracking units through increased costs, and the specific impact depends on the direction of tariff policies [40]