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].

Core Viewpoint - The polypropylene fiber industry is experiencing a steady increase in production, with output projected to grow from 294,100 tons in 2017 to 442,000 tons by 2024, reflecting a compound annual growth rate of approximately 5.3%. However, demand is expected to decline after a peak, with a forecasted demand of 371,600 tons in 2024, leading to an expanded supply-demand gap of 70,400 tons primarily due to a surge in export volumes [1][11]. Industry Development Overview - Polypropylene fiber, derived from the byproduct of petroleum refining, has unique characteristics such as being lightweight, high-strength, and resistant to acids and alkalis. The development of differentiated polypropylene fibers has progressed since the 1980s, with significant advancements in functional applications since 2010 [2]. Policy Background - Recent policies from multiple government departments have reinforced support for the functional chemical fiber industry, emphasizing technological innovation and the development of recycled materials. The 2023 "Industrial Structure Adjustment Guidance Catalog" encourages the recycling of polypropylene and the development of differentiated fibers while restricting low-end production capacity [5][6]. Industry Chain - The polypropylene industry chain consists of upstream production of polypropylene, midstream processing into various products like long fibers and non-woven fabrics, and downstream applications across diverse sectors including automotive, construction, and medical [7]. Supply and Demand Status - From 2017 to 2024, production is expected to rise to 442,000 tons, while demand is projected to fall to 371,600 tons, resulting in a supply-demand gap of 70,400 tons. The increase in exports, which are expected to reach 72,500 tons by 2024, indicates a strong international competitiveness of Chinese polypropylene products [11][13]. Trade Dynamics - Export volumes have surged from 10,800 tons in 2017 to 72,500 tons in 2024, with an average annual growth rate of 30.6%. Conversely, imports have decreased from 3,600 tons to 2,100 tons, indicating a significant trade surplus and a shift towards self-sufficiency in the industry [13]. Competitive Landscape - The market is characterized by high fragmentation, with regional leaders like Hubei Botao and Guangdong Montai leveraging differentiation strategies. The industry concentration remains low, with the top five companies holding less than 30% market share, indicating a competitive environment [15]. Development Trends - The polypropylene industry is expected to transition towards a circular economy, focusing on recycling technologies and sustainable practices. The integration of advanced manufacturing and innovative materials will drive the development of high-end functional fibers for emerging applications [17].