Group 1 - Chemical stocks experienced a partial surge, with Hongbaoli hitting the daily limit, Meibang Technology rising over 10%, and Hongqiang shares increasing by over 9% [1] - Chlor-alkali chemicals, Yida shares, and Bohai Chemical also saw gains, indicating a broader positive trend in the sector [1] - Since the beginning of 2026, the market for epoxy propylene (PO) has shown a strong recovery, with prices continuously rising, leading to significantly improved profit expectations for related companies in the industry [1]

Market Performance - The basic chemical index increased by 0.90% from January 10 to January 16, outperforming the CSI 300 index, which decreased by 0.57%, by 1.47 percentage points, ranking 8th among all sectors [1][2] - The top-performing sub-industries included rubber additives (5.80%), synthetic resins (4.90%), potassium fertilizers (4.85%), textile chemicals (3.03%), and carbon black (2.91%) [1][2] Chemical Price Trends - The top five products with the highest weekly price increases were liquid chlorine (133.33%), industrial-grade lithium carbonate (12.69%), battery-grade lithium carbonate (12.33%), propylene oxide (8.86%), and coal tar (Shanxi Dongyi) (8.53%) [3] - The top five products with the largest weekly price declines were hydrochloric acid (Jiangsu) (-25.00%), concentrated nitric acid (Jinhe Industry) (-8.82%), crude phenol (-7.97%), hydrochloric acid (Shandong) (-7.69%), and hydrogen peroxide (-6.25%) [3] Industry Dynamics - Some refrigerant companies announced profit growth forecasts for 2025, with Sanmei Co. expecting a net profit of 1.99 to 2.15 billion yuan, a year-on-year increase of 155.66% to 176.11%, and Yonghe Co. forecasting a net profit of 530 to 630 million yuan, a year-on-year increase of 110.87% to 150.66% [4] - The competitive landscape for third-generation refrigerants (HFCs) is expected to continue improving, with price increases being a major factor for profit growth [4] - As of January 16, the market prices for mainstream third-generation refrigerants R32, R125, and R134a in East China were 62,500, 48,000, and 56,000 yuan per ton, respectively, with increases of 0%, 7%, and 7% since Q4 2025, and year-to-date increases of 44%, 22%, and 37% [4] Investment Recommendations - Current investment focus areas include the refrigerant sector, with recommendations for Jinshi Resources, Juhua Co., Sanmei Co., and Yonghe Co. [6] - The chemical fiber sector is also highlighted, with suggested companies including Huafeng Chemical, Xin Fengming, and Taihe New Materials [6] - Other recommended companies include Wanhua Chemical, Hualu Hengsheng, Luxi Chemical, and Baofeng Energy [6] - The tire sector recommendations include Sailun Tire, Senqilin, and Linglong Tire [6] - In the agricultural chemicals sector, recommended companies are Yara International, Salt Lake Co., Xingfa Group, Yuntianhua, and Yangnong Chemical [6] - High-quality growth targets include Blue Sky Technology, Shengquan Group, and Shandong Heda [6] - The basic chemical industry maintains an "overweight" rating [6]

Core Viewpoint - The article highlights the successful production launch of the integrated project by Lianhong New Materials, focusing on new energy materials and biodegradable materials, which is a significant step in the company's strategic development in these sectors [2][3]. Group 1: Project Overview - The total investment for the Lianhong Gelun integrated project is 12.5 billion yuan, located in the Lunan High-tech Chemical Park in Tengzhou, Shandong Province [2]. - The project commenced construction in April 2024 and achieved overall completion by September 2025 [2]. - Key production units include: - 300,000 tons/year Propylene Oxide (PO) and Hydrogen production unit launched on December 22 [2]. - 1.3 million tons/year Methanol to Olefins (MTO) and 200,000 tons/year Ethylene-Vinyl Acetate (EVA) units launched on December 10 [2]. - 240,000 tons/year Polyether Polyols (PPG) unit launched on November 5 [2]. Group 2: Technical Features and Applications - The PPG unit utilizes a continuous process with high conversion rates and low energy consumption, serving applications in home, automotive, and construction sectors [3]. - The MTO unit employs a new generation of technology from the Dalian Institute of Chemical Physics, optimizing methanol conversion rates and olefin selectivity, while reducing methanol consumption [3]. - The EVA unit, using a globally leading tubular process, will increase the company's EVA capacity to over 350,000 tons/year, enhancing flexibility in production and competitiveness in various applications such as photovoltaics, cables, and hot melt adhesives [4]. Group 3: Market Position and Future Prospects - Lianhong New Materials is a pioneer in developing photovoltaic film materials and has broken technological monopolies in the EVA production sector, contributing to the drafting of national standards for EVA [4]. - The integrated project positions the company to better meet the growing demand for high-end new materials, ensuring a stable supply of raw materials for downstream products [3].

Core Viewpoint - The announcement from Lianhong New Materials indicates the successful commissioning of its integrated project, which is expected to enhance product diversity and demonstrate industry chain advantages, positively impacting performance despite uncertainties in product profitability [1] Group 1: Project Details - The integrated project by Lianhong New Materials commenced construction in April 2024 and is scheduled for overall completion by September 2025 [1] - Key production units include: - 300,000 tons/year of Propylene Oxide (PO) - 1,300,000 tons/year of Methanol-to-Olefins (MTO) - 200,000 tons/year of Ethylene-Vinyl Acetate (EVA) - 240,000 tons/year of Polyether Polyols (PPG) - All major units have successfully started operations and produced qualified products, currently running stably [1] Group 2: Impact on Company Performance - The project is expected to enrich the company's product structure and highlight its industry chain advantages [1] - There is an anticipation of a positive impact on the company's performance due to the project, although product profitability remains uncertain [1]

Report Information - Report Title: "Profit Rebalancing under Rhythm Game - Outlook for LPG & Propylene Futures Market in 2026" [1] - Report Date: December 18, 2025 - Analysts: Chen Xinchao (Investment Consulting Qualification No.: Z0020238), Zhao Shucen (Contact Person, Futures Practitioner Qualification No.: F03147780) 1. Report Industry Investment Rating - Not provided in the report 2. Core Viewpoints of the Report - The operating logic of the C3 industrial chain is expected to shift from unilateral compression in 2025 to profit repair under range - bound fluctuations in 2026. The propane price center is likely to remain relatively low, providing weak cost - side support for the C3 industrial chain. Meanwhile, with the slowdown of propylene capacity expansion and the continued drive from downstream sectors, the supply - demand outlook for propylene is expected to improve marginally, but attention should be paid to the actual implementation of new plant construction under the low - profit background. The opportunities in the industrial chain mainly lie in periodic repairs rather than a trend reversal [2]. 3. Summary by Directory 3.1. 2025 LPG, Propylene Trend Review 3.1.1 2025 LPG Market Review - The LPG market in 2025 can be divided into four stages: In the first quarter, the domestic civil gas market was in a seasonal peak. The spot price of the lowest deliverable product in the domestic market was around 4,800 - 4,900 CNY/ton, and the market fluctuated widely with costs. From April to May, affected by tariff policies, the external market price of crude oil and FEI market prices plummeted, and then rebounded. The domestic market was weak due to high inventory and low demand. From June to September, with the shift of the import trade center to the Middle East, the supply was stable, but the demand was weak, and the market was under pressure. In the fourth quarter, the CP price dropped, PDH profit was briefly repaired, and the chemical demand increased. The supply - demand situation improved, but the long - term supply was still loose [8][9]. 3.1.2 2025 Propylene Market Review - The propylene market in 2025 also had three stages: In the first quarter, new capacity led to an oversupply situation, and the price declined. From June to August, due to the shutdown of main production plants and maintenance of multiple devices, the supply tightened, and the price rebounded, but the sustainability was limited due to weak downstream demand. In the fourth quarter, the downstream profit was compressed, demand weakened, and the price dropped to a five - year low [11][13][14]. 3.2. 2026 LPG Operating Logic 3.2.1 Supply Side - In 2025, China's LPG imports remained stable, but the import structure changed significantly. After the adjustment of Sino - US tariff policies in April, the import from the Middle East increased, while that from the US decreased. In 2026, the Middle East's LPG supply has an expected increase, with the main increment concentrated in the second half of the year. The US production growth is expected to slow down, but the export capacity will improve [15][18][34]. 3.2.2 Demand Side - The growth of PDH capacity will further slow down in 2026, and the profit is expected to be repaired. The average operating rate of PDH is expected to increase, driving an additional propane demand of about 2 million tons. The demand for imported propane from domestic cracking plants is expected to remain weak. The propane demand in Japan and South Korea is expected to remain stable, and the growth rate of India's propane demand is expected to slow down, while Southeast Asia's demand may continue to be supported by the operation of existing cracking plants [41][44][52]. 3.2.3 LPG Summary - The supply - demand pattern of propane in 2026 shows a characteristic of "tight at the beginning and loose later, gradually becoming looser". In the first quarter, the supply is relatively tight, but better than in the fourth quarter of 2025. In the second quarter, the market is in a transition period. In the second half of the year, with the release of new capacity in the Middle East, the supply - demand pattern will become looser [57]. 3.3. 2026 Propylene Operating Logic 3.3.1 Supply Side - In 2025, the propylene supply expanded rapidly, and the over - supply situation intensified. In 2026, the growth rate of propylene capacity is expected to slow down to about 9%. The new capacity is mainly concentrated in the second half of the year, and most of the new capacity comes from integrated plants. The supply is still expected to be loose, and the focus will shift to the risks of structural and rhythm mismatches [59][67]. 3.3.2 Demand Side - In 2025, the demand for propylene from major downstream sectors increased by 15%. In 2026, the nominal demand growth rate is about 11%, mainly from polypropylene, propylene oxide, and butanol - octanol. However, due to the over - capacity in the downstream and compressed profits, the actual demand may be less than the nominal demand [69][75]. 3.3.3 Propylene Summary - In 2025, the propylene market in Shandong was generally in a state of over - supply, with a brief tightening in the middle of the year. In 2026, the upstream and downstream production schedules of propylene show a structural characteristic of "downstream first, more downstream production throughout the year". Nationally, the supply - demand gap is expected to narrow in the first half of the year, and the overall pattern will remain stable in the second half of the year. In Shandong, the supply - demand situation is expected to improve gradually, with a possible improvement in the second half of the year [87][89]. 3.4. Overall Summary - In 2025, the global propane supply was abundant, and the price decreased. The propylene market was in an over - supply situation, and the C3 industrial chain was under pressure. In 2026, the propane price is expected to stay low, and the supply - demand situation of propylene is expected to improve marginally. The operating logic of the C3 industrial chain is expected to shift from unilateral compression to profit repair under range - bound fluctuations [95][96].

Report Industry Investment Rating - Not provided Core View of the Report - The domestic propylene futures market is facing dual pressures of continuous capacity expansion and weak downstream demand, with an imbalanced supply - demand fundamental. The price of propylene futures is expected to maintain a weak and volatile pattern in the short term, and the real improvement of the fundamentals requires the appearance of an inventory inflection point [2][6] Summary by Relevant Catalogs Supply Situation - China's propylene production capacity is in a rapid expansion cycle. In 2024, the total production capacity reached 70.44 million tons/year with a utilization rate of 76.6%. In 2025, over 5 million tons of new capacity is expected to be released. The PDH process is the main force for expansion, but most PDH plants face cost pressures and operate at a low utilization rate. In October 2025, the output was 5.476 million tons, a month - on - month increase of 5.2% and a year - on - year increase of 15.77%, and the capacity utilization rate was 74.0% [2] - Import profit is in a continuous inversion state, suppressing import volume. Although there is some room for export growth, the overall export volume remains stable, and domestic supply mainly depends on domestic demand [3] Inventory Situation - The port inventories in major distribution centers such as Shandong and East China are on an upward trend, and the social total inventory is estimated to be around 1.8 million tons. The inventory - to - consumption ratio is rising, and the production enterprise's in - plant inventory is also at a historical high. Downstream factories adopt a low - inventory strategy, which intensifies the upstream shipment pressure [3] Demand Situation - Although the downstream production capacity of propylene is growing, the terminal demand recovery is far below expectations, showing a "weak in peak season" situation. Downstream enterprises are mostly in a loss state, with low acceptance of high - priced raw materials and only maintaining rigid demand [3] - The performance of downstream products is differentiated. PP has relatively stable operating rates, but the profitability of different production routes varies greatly. Epoxy propane, butanol - octanol, and phenol - acetone are in losses, while acrylic acid and esters are profitable. Overall, the downstream's willingness to purchase propylene is severely suppressed [4] Macro - factor Influence - The end of the US government "shutdown" and the reduced probability of a Fed rate cut in December have weakened the macro - optimistic expectations for propylene futures. The market focus has returned to the industrial fundamentals, and the propylene futures price is more likely to be dragged down by the fundamentals [4][5]

Core Insights - The Lianhong Gelun integrated project for new energy materials and biodegradable materials has achieved overall handover in Zaozhuang, Tengzhou, and is expected to be fully operational by the end of this year [1] - The project represents a significant investment of 12.5 billion yuan and covers an area of approximately 1,700 acres, with production capacities including 1.3 million tons/year of methanol-to-olefins (DMTO), 200,000 tons/year of ethylene-vinyl acetate copolymer (EVA), 300,000 tons/year of propylene oxide (PO), 50,000 tons/year of polycarbonate (PPC), and 240,000 tons/year of polyether polyols (PPG) [1] - The project commenced site leveling in February 2023 and will see full construction starting in April 2024, with peak on-site personnel exceeding 12,000 [1] - The chairman of Lianhong Group emphasized the project's importance in solidifying the company's future development and aims for it to become a model of safety, innovation, and efficient operation in the industry [1] Future Plans - By the end of 2025, all projects planned under Lianhong's strategic phase 2.0 are expected to be implemented, leading to clearer business segments in new energy materials, biological materials, electronic materials, and specialty materials, with a richer product variety and enhanced scale [2]