Report Industry Investment Rating - Not provided in the given content Core Viewpoints - For LLDPE, the cracking supply is shrinking and cost transmission is poor. For PP, the supply is limited, exports are favorable, and the risk - free window for futures and spot has opened [1]. - Geopolitical situation is escalating, affecting the shipping in the Strait of Hormuz, which is expected to strengthen raw materials like naphtha, raising the cost of PE. The demand for mulch film after the festival is in line with the season, and the packaging film production has recovered, but cost transmission takes time. For PP, C3 is affected by supply disruptions from Saudi Arabia and Iran, with strong cost support, and PDH maintenance is still high [2]. - The supply - demand game for PP has intensified. The downstream has resumed work intensively, and the demand has improved month - on - month. The PDH profit remains at a low level, and multiple PDH units in South China are still under maintenance. Attention should be paid to the marginal changes of cracking and PDH units [3]. Summary According to Relevant Catalogs Fundamental Tracking - **LLDPE (L2605)**: The closing price yesterday was 8818, with a daily decline of 1.10%. The trading volume was 1103490, and the open interest decreased by 20434. The 05 - contract basis was - 418 (compared to - 516 the previous day), and the 05 - 09 contract spread was 214 (compared to 235 the previous day). The spot prices in North, East, and South China were 8400, 8500, and 8600 yuan/ton respectively, with the South China price dropping from 8700 yuan/ton the previous day [1]. - **PP (PP2605)**: The closing price yesterday was 9019, with a daily decline of 1.52%. The trading volume was 1310098, and the open interest decreased by 29253. The 05 - contract basis was - 319 (compared to - 388 the previous day), and the 05 - 09 contract spread was 433 (compared to 513 the previous day). The spot prices in North, East, and South China were 8650, 8700, and 8850 yuan/ton respectively, with the North and East China prices dropping from 8750 and 8770 yuan/ton the previous day [1]. Spot News - For polyolefins, the PE external naphtha units have begun to give concentrated maintenance plans from late March to April, and the PE operating rate may drop below 70%. Zhongsha and Zhongying HD stopped production today. Zhenhai PP stopped production, and the PP operating rate dropped below 70% again. There are still many planned PDH maintenance, and the PDH profit has reached a new low. The basis has continued to weaken, cost transmission is poor, downstream terminals have not accepted the order price adjustment, manufacturers have lowered the ex - factory price, and the North China delivery window has continued to open [1]. Market Condition Analysis - **PE**: Geopolitical situation is escalating, shipping in the Strait of Hormuz is stagnant, and raw materials like naphtha are expected to be strong, raising the cost of PE. After the festival, the demand for mulch film is in line with the season, and the packaging film production has recovered, but cost transmission takes time. On the supply side, BASF Zhanjiang has achieved mass production, the planned maintenance and production reduction in March are increasing, the production of standard products has declined, and inventory has started to be depleted. Attention should be paid to the geopolitical persistence and cost transmission [2]. - **PP**: C3 is affected by supply disruptions from Saudi Arabia and Iran, with strong cost support, and PDH maintenance is still high. There is no new production before the 2605 contract, and the supply - demand game for existing suppliers has intensified. The downstream has resumed work intensively, and the demand has improved month - on - month. The PDH profit remains at a low level, multiple PDH units in South China are still under maintenance. Attention should be paid to the marginal changes of cracking and PDH units [2][3]. Trend Intensity - The trend intensity of LLDPE is 1, and the trend intensity of PP is 1 [3]

2026 年 3 月 17 日 LLDPE：裂解供应收缩，下游高价抵触 PP：多种原料供应受限，上游开工收缩 周富强 投资咨询从业资格号：Z0023304 zhoufuqiang@gtht.com 【基本面跟踪】 聚烯烃基本面数据 | 期 货 | L2605 | | | | PP2605 | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 昨日收盘价 | 日涨跌 | 昨日成交 | 持仓变动 | 昨日收盘价 | 日涨跌 | 昨日成交 | 持仓变动 | | | 8677 | 3.10% | 1283744 | 2424 | 8857 | 2.95% | 1485276 | -4918 | | | 昨日价差 | | 前日价差 | | 昨日价差 | | 前日价差 | | | 05合约基差 | -327 | | -166 | | -207 | | -103 | | | 05-09合约价差 | 305 | | 271 | | 551 | | 535 | | | 现货价格 | 昨日价格 | （元/吨） | 前日价格 | （元/吨） | 昨日 ...

Group 1 - The core viewpoint is that chemical product prices are expected to continue rising due to tightening supply and demand, increasing raw material costs, and strong market sentiment, with significant price spread expansions observed in January 2026 [1] Group 2 - In January 2026, the price spread for butadiene was 4630 CNY/ton, up 65% month-on-month [2] - The price spread for PDH was 48 USD/ton, also up 65% month-on-month [3] - The price spread for urea was 411 CNY/ton, increasing by 44% month-on-month [4] - The price spread for PTA was 1006 CNY/ton, rising by 22% month-on-month [5] Group 3 - Butadiene prices are supported by tightening supply due to some companies halting exports and improved downstream demand, particularly in synthetic rubber production [2] - PDH price spreads are expanding due to increased maintenance shutdowns and supply-demand mismatches, leading to higher propylene prices [3] - Urea prices are driven by strong demand from manufacturers ahead of the Spring Festival and low inventory levels [4] - PTA prices are supported by rising international oil prices and cost pressures, with production cuts in the polyester sector expected to take effect [5]

1. Report Industry Investment Rating There is no information about the report industry investment rating in the provided content. 2. Core Viewpoints - The current core contradiction affecting LPG price trends includes the volatile crude oil market on the cost - side, with geopolitical factors dominating in the short - term. The outer - market propane is oscillating, and the domestic fundamentals are relatively stable compared to last week but with significant price fluctuations due to the US - Iran situation. The market is expected to be in an oscillating state, and attention should be paid to the risks above [1][2][19]. - In the long - term, the supply is expected to be resilient next year, while the demand growth in China and India, the main growth engines of Asian LPG demand, is expected to slow down [14]. 3. Summary by Directory 3.1 Core Contradiction and Strategy Suggestion 3.1.1 Core Contradiction - Cost - side: The crude oil market is oscillating. In the medium - to - long - term, it is affected by both supply surplus and geopolitical factors, with geopolitics being dominant in the short - term. The US - Iran situation has caused the oil price to fluctuate this week [1]. - Outer - market propane: It is oscillating. The shipping volume in the Middle East is neutral, and the arrival premium is still high. In the US, supply has declined due to the cold wave, and inventory is in a destocking state [1]. - Domestic fundamentals: The supply remains low, the arrival volume is not high, and the port inventory has slightly increased. The demand is weak due to the maintenance of PDH devices. The market is affected by the US - Iran situation, and if the situation escalates, it will have a significant impact on the supply side [2]. 3.1.2 Trading Strategy Suggestion - **Market Positioning**: The market is in an oscillating state, and the price range of PG03 is 3800 - 4500 [19]. - **Basis Strategy**: Wait and see, as the market is volatile due to geopolitical uncertainties [19]. - **Calendar Spread Strategy**: Go for a reverse spread at high prices. The 03 contract is the forced cancellation month, and the short - term warehouse receipt volume is not large [20]. - **Hedging Arbitrage Strategy**: Pay attention to the opportunities of internal - external price differences [20]. 3.1.3 Industrial Customer Operation Suggestion - **LPG Price Range Forecast**: The price range of LPG is 3800 - 4500, the current volatility (20 - day rolling) is 25.84%, and the historical percentage of the current volatility (3 - year) is 53.65% [21]. - **Hedging Strategy**: For inventory management, when the inventory is high, short PG futures to lock in profits. For procurement management, when the procurement inventory is low, buy PG futures at low prices to lock in procurement costs [21][23]. 3.2 This Week's Important Information and Next Week's Attention Events 3.2.1 This Week's Important Information - **Negative Information**: PDH has been in maintenance this week, with an operating rate of about 62%. Many devices such as Jinneng, Juzhengyuan, and Zhongjing are in maintenance [23]. 3.2.2 Next Week's Important Events - February 10: US January New York Fed 1 - year inflation expectation. - February 11: China CPI/PPI; US January unemployment rate. - February 13: US January seasonally adjusted CPI [29]. 3.3 Disk Interpretation 3.3.1 Price - Volume and Capital Interpretation - **Domestic Market**: The PG03 contract oscillated this week. The net position of the main profitable seats increased, and there were no obvious changes in the top 5 long and short positions in the dragon - tiger list. The net short position of the profitable seats decreased slightly, the net long position of foreign capital increased slightly, and the net long position of retail investors decreased slightly. Technically, it is still advisable to go long at low prices [25]. - **Foreign Market**: FEI M1 closed at 545.5 US dollars/ton (- 27.68), with a premium of 53.5 US dollars/ton; CP M1 closed at 535 US dollars/ton (- 10), with a CP premium of - 15 US dollars/ton; MB M1 closed at 339 US dollars/ton (+ 7.59). Affected by the US - Iran negotiation plan, the outer - market propane gave back some risk premiums [33]. 3.3.2 Basis and Calendar Spread Structure - The LPG inter - month structure is still in a BACK structure, and the 3 - 4 month spread closed at - 303 yuan/ton [31]. - This week, FEI M1 - M2 was 28.02 US dollars/ton; CP M1 - M2 was 13.5 US dollars/ton; MB M1 - M2 was 2.6 US dollars/ton. The calendar spreads of CP and MB fluctuated greatly, and the near - month of CP gave back some geopolitical premiums, and the calendar spread weakened [42]. 3.4 Valuation and Profit Analysis 3.4.1 Industrial Chain Upstream and Downstream Profit Tracking - **Upstream Profit**: This week, the gross profit of major refineries was 771 yuan/ton (+ 111), and the gross profit of Shandong local refineries was 143 yuan/ton (- 23). The profit of local refineries continued to shrink [48]. - **Downstream Profit**: The PDH profit with FEI as the cost was - 443 yuan/ton, and the PDH profit with CP as the cost was - 192 yuan/ton, still in a loss state. The MTBE gas - fractionation profit was - 19.75 yuan/ton, the isomerization profit was 175 yuan/ton, and the alkylated oil profit was - 99.4 yuan/ton, with the profits of MTBE and alkylated oil strengthening [50]. 3.4.2 Import and Export Profit Tracking This week, the import profit was oscillating, mainly due to the large fluctuations in outer - market prices [53]. 3.5 Supply, Demand, and Inventory 3.5.1 Overseas Supply and Demand - **US Supply and Demand**: This period, production decreased due to weather, demand changed little, exports increased slightly, and inventory destocked faster with the decline in production, but the overall inventory level was still high [60]. - **Middle East Supply**: In 2025, the Middle East exported 48463 KT of LPG, a year - on - year increase of 2.43%. In January 2026, it exported 4043 KT, a year - on - year decrease of 0.41%. The shipping volume in recent weeks has been low [69]. - **India Supply and Demand**: From January to December, India's LPG demand was 331774 KT, a year - on - year increase of 6.67%. In 2025, LPG imports were 23229 KT, a year - on - year increase of 8.12%. In January 2026, imports were 2204 KT, a year - on - year increase of 23.68% [72]. - **South Korea Supply and Demand**: South Korea's LPG demand has no obvious seasonality. In 2025, it imported 8434 KT of LPG, a year - on - year decrease of 2.56%. In January 2026, it imported 762 KT, a year - on - year increase of 13.32%. Since the fourth quarter, the cracking economy of LPG relative to naphtha has not been good [80]. - **Japan Supply and Demand**: Japan is highly dependent on imported LPG, and its demand and imports have obvious seasonality. In January 2026, Japan imported 1004 KT of LPG, a year - on - year decrease of 4.78%, and its LPG inventory was at a new low year - on - year [83]. 3.5.2 Domestic Supply and Demand - **Domestic Supply - Demand Balance**: Supply is expected to remain high, but the external sales volume is not high. Import volume is not high. Demand shows a decrease in chemical demand and an increase in combustion demand. In the first quarter, chemical demand weakens marginally due to PDH maintenance. Inventory is destocking, mainly at the port [86]. - **Domestic Supply**: The operating rate of major refineries is 81.81% (+ 1.79%); the operating rate of independent refineries is 51.68% (- 1.92%), and the utilization rate excluding large refineries is 47.28% (- 2.14%). The domestic LPG external sales volume is 54.88 tons (+ 0.51), and the arrival volume is 50.8 tons (+ 1.3). The factory inventory rate is 24.21% (- 0.39%), and the port inventory is 201.8 tons (+ 14.2) [89]. - **Domestic Demand**: - **PDH Demand**: Devices such as Jinneng, Zhongjing, and Juzhengyuan are in maintenance [100]. - **MTBE Demand**: There were no device changes this week, and the internal - external price difference was oscillating [104]. - **Alkylated Oil Demand**: Jingmen Yuchu was in maintenance until the end of January, and Puyang Zhongwei was newly in maintenance [112]. - **Combustion Demand**: There is no specific data, but the report mentions that combustion demand increases [86].

Group 1 - The company Donghua Energy expects a net profit attributable to shareholders of 34 million to 50 million yuan for 2025, representing a year-on-year decline of 92.34% to 88.74% [1] - The basic earnings per share are projected to be between 0.0216 yuan and 0.0317 yuan [1] - The decline in performance is primarily due to the impact of the macro environment and industry cycle, with a year-on-year drop in the average prices of propylene and polypropylene products, particularly a sharp decline in polypropylene prices in the fourth quarter [1] Group 2 - The overall profitability of the PDH industry is facing severe challenges due to the complex market situation [1] - The company is leveraging its systematic advantages in full industry chain operations to continuously improve technology and reduce costs, ensuring stable operations in its main business [1]

1. Report Industry Investment Rating - The short - term investment rating for LPG is "short - term bullish", but it is recommended that investors mainly short at high levels [4]. 2. Core Viewpoints of the Report - In the short term, the fermentation of cold snaps and geopolitical conflicts drives the upward movement of PG, but the actual increase in the futures market is limited. Coupled with a significant decline in the PDH operating rate and a notable weakening of chemical demand, it is advisable for investors to short at high levels [4]. 3. Summary According to Relevant Catalogs 3.1 Market Review - The main contract of LPG futures rebounded after a decline, with a fluctuation range of 4,030 - 4,220 yuan/ton. International crude oil and LPG prices continued to rise, but the domestic market supply kept increasing. Although the volume of imported ships decreased, some terminals sold resources. Downstream resistance to high prices led to a decline in market prices. Additionally, domestic chemical demand decreased, and combustion demand was mediocre, resulting in a lack of market confidence and a downward shift in the overall trading center [6]. 3.2 Influencing Factors of LPG 3.2.1 Supply - Last week, the total commercial volume of LPG was about 528,500 tons (a 2.13% change), including 228,200 tons of civil gas (a 5.80% change), 186,400 tons of industrial gas (a - 1.53% change), and 164,200 tons of ether - post C4 (a - 1.74% change). The arrival volume of LPG last week was 490,000 tons (a - 9.83% change). A refinery in the southwest and a local refinery in Shandong resumed supply, and some enterprises reduced self - use, leading to an increase in supply. There were no news of start - up or shutdown this week, but the increment would continue to affect supply, and the supply might increase [4]. 3.2.2 Demand - In winter, heating demand remained stable, and the combustion demand for LPG gradually improved, reaching a relatively high level. Before the Spring Festival, the load of PDH plants gradually decreased, and the plant profit loss was repaired. The propane procurement demand of port chemical enterprises was relatively rigid, but there were news of plant production cuts recently, and the expected operating rate would gradually decline, causing the propane chemical demand to fall. The MTBE profit was in a loss state, the overseas olefin blending oil demand slowed down, the domestic export window closed, most orders had been executed, and the high - operating rate of refineries was difficult to maintain, thus suppressing the price trend of civil gas [4]. 3.2.3 Inventory - Last week, the in - plant inventory of LPG was 165,200 tons (a 5.42% change), and the port inventory was 1,996,800 tons (a - 1.53% change). Affected by widespread snow and increased supply, some local manufacturers had difficulty in shipping, leading to an increase in the refinery storage capacity ratio. The number of arriving ships at the port decreased, remaining at a low level, and the continuous shortage of imported resources meant that the terminals mainly consumed inventory. With the decline in chemical demand and limited arriving ships, the terminal shipping volume was small, and some terminals stopped shipping, so the demand showed a narrowing trend. With a low arrival volume, the port inventory continued to decline this period [4]. 3.2.4 Basis and Position - The weekly average basis was 317.80 yuan/ton in East China, 715.40 yuan/ton in South China, and 359.40 yuan/ton in Shandong. The total number of LPG warehouse receipts was 5,898 lots, with no change, and the lowest deliverable area was East China [4]. 3.2.5 Chemical Downstream - The operating rates of PDH, MTBE, and alkylation were 62.25%, 58.15%, and 37.41% respectively. The profits of PDH to propylene, MTBE isomerization, and alkylation in Shandong were - 438.18 yuan/ton, - 203 yuan/ton respectively [4]. 3.2.6 Valuation - The PG - SC ratio was 1.29 (a 0.19% change), and the PG spread between the main and secondary months was - 278 yuan/ton (a 14.88% change). In the fourth quarter, gas prices were firm, while crude oil showed a bearish trend, and the oil - gas cracking spread had a weakening trend [4]. 3.2.7 Other Factors - The EIA crude oil inventory in the US last week increased by 3.6 million barrels more than expected, and the IEA maintained its expectation of a loose crude oil supply in 2026. The State - owned Assets Supervision and Administration Commission of the State Council announced that Sinopec and China National Aviation Fuel would be reorganized. The news of the US's strike against Iran fermented again, and the geopolitical situations in the Middle East and Russia - Ukraine were tense. The cold snap caused a 60% surge in natural gas prices, leading to a short - term jump in oil and gas prices. Events such as the Trump administration's attempt to occupy Greenland and seize Russian oil tankers fermented again, causing market panic about geopolitics [4]. 3.3 Trading Strategies - Unilateral trading: Short at high levels. - Arbitrage: Pay attention to the PG3 - 4 reverse spread, long SC and short PG, long PP and short PG to make profits from PDH [4].

Report Overview - Report Title: C3 Industry Chain Weekly Report - Report Date: January 18, 2026 - Report Author: Chen Xinchao, Zhao Shucen Industry Investment Rating - Not provided in the report Core Views LPG Part - Short - term supply is tight, and attention should be paid to the realization of downward drivers. Although the supply in the Middle East remains tight, there is still supply pressure after the impact of fog at US terminals weakens. With low chemical profits and many PDH maintenance plans in Q1, the downward drive is significant. [3][4] - The lowest deliverable product may switch as the spread between Shandong civil and ether - post C4 widens. Near the cancellation month, attention should be paid to the change in the number of warehouse receipts. [4] Propylene Part - After the rapid rise of spot prices, the upward drive weakens. The tight - balance pattern of propylene is difficult to change next week. Although the downstream's enthusiasm for chasing high - priced propylene may weaken, the rigid demand for production provides strong support, so propylene is expected to remain in an upward - biased pattern. [6][7] Summary by Directory LPG Part Price & Spread - Domestic LPG spot prices maintain a moderately strong and fluctuating trend. The lowest deliverable product is still Shandong civil gas, and the spread between civil and ether - post C4 has widened to 100 yuan/ton. [10][13] - Propane prices maintain a moderately strong trend, with the FEI index and related import costs showing an upward trend. The spot premium further increases, and the freight rate remains stable, while the arbitrage window from the US Gulf to the Far East expands. [10][21][27] Supply - US LPG shipments to Asia are flat month - on - month, while Middle East shipments are tight. The total LPG commodity volume is 51.9 tons (+0.1%), with 21.7 tons of civil gas (-0.1%) and 16.7 tons of ether - post C4 (-0.1%). Propane imports decrease by 0.2 tons month - on - month. [39][43][49][63] Demand & Inventory - PDH operating rates decline, while MTBE operating rates remain flat. LPG refinery inventories are at a neutral level compared to the same period in 2025, with a slight de - stocking of civil gas refinery inventories. Port inventories in East China, Shandong, and South China decline month - on - month, while Fujian accumulates inventory due to concentrated arrivals. [80][82][100] Propylene Part Price & Spread - The cost - end propane is firm, propylene prices rise strongly, and PDH profits fluctuate and recover. Downstream prices continue to rise, but the spread between propylene and powder returns to the loss range. International and domestic propylene prices rise month - on - month, and the import window is partially opened. [115][117][118] Balance Sheet - PDH and MTO operating rates decline month - on - month, and the powder profit is compressed, leading to a decline in its operating rate. The supply is expected to tighten gradually as the Jinneng PDH and Lianyungang Shenghong MTO are expected to undergo maintenance. The demand is supported by the rigid procurement of PP powder, and the situation is expected to improve in January. [139][159] Supply - The overall upstream operating rate of propylene is 75.2% (-0.7%). Refinery operating rates remain stable, while cracking and PDH operating rates decline. MTO operating rates also decline, but profits are recovering. [170][190][195] - The import volume of propylene increases by 0.96 tons (7.21%) month - on - month, and the import profit shows an upward trend. [204] Demand - The operating rates of PP, PP powder, PO, and acrylonitrile decline, while the operating rates of n - butanol, octanol, phenol - acetone, and ECH increase. The profit performance of PP shows process differentiation, and the profit of PP powder returns to the loss range. PO prices rise strongly, and the company's profitability improves significantly. [211][231][243][273] Downstream Inventory - PP production enterprise inventory, trader inventory, and powder inventory all decline. The inventory of acrylonitrile plants and ports shows different changes, and the inventory of phenol and acetone in Jiangyin Port declines. [298][299][300]

Report Summary 1. Investment Rating The document does not mention the industry investment rating. 2. Core Views - **LPG**: Short - term supply is tight, and attention should be paid to the realization of downward drivers. The domestic PG fluctuates widely in the short term, affected by geopolitical factors. Supply pressure may emerge later, and downward drivers are gradually appearing, but geopolitical situations and PDH device feedback need to be closely monitored [3][4]. - **Propylene**: Spot supply and demand are tightening, and the trend is strong. Next week, with the reduction in supply and the increase in demand, there is still upward potential for propylene [5]. 3. Summary by Directory LPG Part - **Price & Spread** - Domestic LPG spot prices maintain high - level fluctuations, with significant increases in civil and imported gas prices and a further decline in ether - post prices. Propane prices are oscillating strongly, Asian spot premiums are rising further, CP FOB premiums are falling, and freight rates are increasing [8][12][21][23]. - **Supply** - Domestic LPG production shows a decrease, with a total commodity volume of 518,000 tons (-1.1%). US LPG shipments to Asia are increasing month - on - month, and Middle Eastern LPG shipments are recovering [3][33][35]. - **Demand & Inventory** - Chemical demand shows a slight increase in PDH operating rates and a slight decline in MTBE operating rates. Domestic LPG refinery inventories are at a neutral level compared to the same period in 2025, civil gas refinery inventories have small month - on - month changes, and terminal import inventories show destocking in East China and Shandong and inventory accumulation in South China [63][65][86]. Propylene Part - **Price & Spread** - The cost - side propane is firm, propylene prices stabilize and then rebound, and PDH profits are oscillating and recovering. Downstream trends are improving further, and profits are being repaired. International/US - dollar prices are rising slightly month - on - month, the import window remains closed but the inversion is narrowing, and domestic prices are weakly operating [98][100][102][112]. - **Balance Sheet** - PDH operating rates are increasing month - on - month, powder production operating rates are further declining, and butanol and octanol operating rates are increasing significantly. Supply is expected to decrease due to planned maintenance of some devices, while demand is expected to increase, with some downstream devices having restart and load - increasing plans [123][148]. - **Supply** - The overall upstream operating rate of propylene is 76.0% (+1.1%). Refinery/main - plant operating rates are slightly increasing to 77%, cracking/ethylene cracking operating rates are 83.5% (-0.1%), PDH capacity utilization is 75.6% (+0.5%), and MTO capacity utilization is 88.1% (+0.6%) [152][161][167][172]. - **Demand** - PP capacity utilization is 75.5% (-1.3%), PP powder capacity utilization is 37.4% (-1.2%), PO capacity utilization is 73.7% (+0.1%), acrylonitrile capacity utilization is 78.8% (+0.5%), acrylic acid capacity utilization is 86.7% (+3.6%), n - butanol capacity utilization is 83.1% (+2.1%), octanol capacity utilization is 89.0% (+7.0%), phenol - ketone capacity utilization is 85.5% (+4.5%), and ECH capacity utilization is 49.27% (-0.67%) [189][212][224][236][240][250][255][260][268]. - **Downstream Inventory** - PP production enterprise inventories and powder inventories show different trends, with production enterprise inventories decreasing and powder inventories increasing. Inventories of other downstream products such as phenol, acetone, and acrylonitrile also have corresponding changes [273][277][278].

Group 1: Report Industry Investment Rating - No information provided Group 2: Core View of the Report - The overall fundamentals of PP provide limited support at the end of the year. With the PDH profit at a new low, but the upstream having locked in raw materials and made some pre - sales earlier, the willingness to cut production is not strong. It is expected that PP will continue to be weak. Attention should be paid to the marginal changes of PDH devices under the deep - loss PDH profit [2] Group 3: Summary by Relevant Catalogs 1. Fundamental Tracking - **LLDPE Futures Data**: The closing price of PP2605 was 6330, with a daily decline of 0.28%. The trading volume was 374,453, and the position changed by 535 [1] - **LLDPE Basis and Spread Data**: The 05 - contract basis was - 160 (compared to - 208 the previous day), and the 05 - 09 contract spread was - 25 (compared to - 20 the previous day) [1] - **LLDPE Spot Price Data**: The spot prices in North China, East China, and South China were 6180 yuan/ton, 6170 yuan/ton, and 6260 yuan/ton respectively, showing increases compared to the previous day [1] 2. Spot News - Before the festival, the domestic PP market had partial small increases. After the festival, due to the intensification of geopolitical conflicts in South America during the festival, which boosted oil price expectations, the futures fluctuated on the first day after the festival, and the spot prices rose. However, the end - of - year demand is difficult to provide continuous elasticity, the sustainability of buying is questionable, and the warehouse receipts remain at a high level. The PP US - dollar market price remained stable, with overseas suppliers having low enthusiasm for offering to China, and downstream buyers continuing to make rigid - need purchases, resulting in difficult improvement in trading [1] 3. Market Condition Analysis - **Cost Side**: Crude oil and propane prices are strong. The chemical configuration in the market is differentiated, and the hedging logic between aromatics and olefins is continuously strengthened [2] - **Supply Side**: There is no new production before the 2605 contract, and the game between existing supply and demand intensifies [2] - **Demand Side**: The follow - up of new orders from downstream industries weakens, and downstream factories are still cautious in purchasing, resulting in weak demand [2] 4. Trend Intensity - The PP trend intensity is 0 [2]

Report Information - Report Name: C3 Industry Chain Weekly Report [1] - Report Date: January 4, 2026 [1] - Analyst: Chen Xinchao [1] - Contact Person: Zhao Shucen [1] Investment Rating - Not provided in the content Core Views LPG - Geopolitical factors disrupt costs, and attention is paid to the realization of downward drivers. The market is relatively stable during holidays, with the internal PG fluctuating and consolidating. After the holiday, the high opening of the January CP official price boosts market sentiment, but the coexistence of supply return and weakening chemical demand expectations remains, and the loose pattern remains unchanged. The market price rises and then falls. In the future, the geopolitical conflict between the US and Venezuela during the holiday is expected to disrupt the cost-side crude oil in the short term, and the increase in the January CP will support the propane trend. However, high prices suppress buying interest, the actual import cost support is limited, and the supply pressure remains. Meanwhile, the current chemical profit is at a low level, there are many PDH maintenance plans in the first quarter, the economic efficiency of cracking propane feedstock is insufficient, and the procurement increment is limited, so the downward driver is gradually emerging. [4][5] Propylene - There is limited upward and downward driving force, and the spot price trend stabilizes. Next week, there will be a mix of start-ups and shutdowns in terms of supply, and the demand side is expected to increase. Overall, propylene lacks obvious trend guidance and is expected to remain volatile and stable in the short term. However, the high opening of CP further compresses the profit of PDH devices, and attention should be paid to the realization of the expected increase in unexpectedly shut-down devices in the first quarter. [8] Summary by Directory LPG Part Price & Spread - Domestic LPG spot prices and basis show regional differentiation in civil use trends, and import costs are relatively firm. The prices of propane in the international market show a certain degree of fluctuation, and the spot premium has significantly declined. [11] - The domestic LPG market price shows a pattern of strong performance in South China and stable performance in East China and Shandong. [15] - The regional quotes, premiums, and freight rates show that the CP official price opens high, but the premium falls. [23] - The propane price has declined month-on-month. [32] Supply - The US LPG shipment volume to Asia has increased month-on-month, while the Canadian LPG shipment volume remains relatively stable. The Middle East LPG shipment volume is tight in the spot market, and the shipments are delayed. The total LPG commodity volume in China has increased slightly, and the propane commodity volume has decreased in terms of import arrivals. [42][48][49][64][76] Demand & Inventory - In terms of chemical demand, the PDH operating rate has increased, while the MTBE operating rate has decreased. The domestic LPG refinery inventory is at a relatively low level compared to the same period last year, with limited month-on-month changes. The civil LPG refinery inventory has changed little month-on-month. The LPG terminal import inventory has significantly decreased month-on-month due to lower-than-expected arrivals. [80][82][90][99] Propylene Part Price & Spread - In the propylene industry chain, the cost-side propane first declines and then rises, while the propylene price remains stable. The prices of some downstream products of propylene have improved, and the profit of powder materials has improved. The international/US dollar price of propylene remains flat month-on-month, and the domestic price trend remains stable. [111][113][115][123] Balance Sheet - In the propylene industry chain, the PDH operating rate has increased month-on-month; the powder material operating rate has further declined, while the butanol and octanol operating rates have significantly increased. The supply and demand of propylene in the national and Shandong regions show certain changes, and the inventory has also changed accordingly. [135][138][144][150][155][157][162] Supply - The overall upstream operating rate of propylene is 75.0% (+0.9%). The refinery/main operating rate remains at 75%, and the local refinery operating rate is 56%. The ethylene cracking operating rate is 82.8% (-0.4%), and the cracking profit center has slightly improved month-on-month. The PDH capacity utilization rate is 76.4% (+1.4%), and the MTO capacity utilization rate is 87.8% (-1.7%). [167][169][179][184][189] Demand - The downstream PP capacity utilization rate is 76.9% (-2.5%), and the profit has stopped falling and slightly recovered month-on-month. The PP powder capacity utilization rate is 37.6% (+0.7%), and the spread between powder materials and propylene has continued to recover, with some devices returning. The PO capacity utilization rate is 74.1% (-2.0%), and the operating rate is expected to decline slightly further. The acrylonitrile capacity utilization rate is 80.3% (-0.3%), and the profit has increased month-on-month. The acrylic acid capacity utilization rate is 79.9% (+0.4%), and the profit has increased month-on-month. The n-butanol capacity utilization rate is 79.9% (+2.1%), and the profit has increased significantly month-on-month. The octanol capacity utilization rate is 85.0% (+3.0%), and the profit has increased month-on-month. The phenol-ketone capacity utilization rate is 78.5% (+2.5%), and the profit has increased slightly month-on-month. The ECH capacity utilization rate is 50.82% (+2.39%), and the price and profit have both increased month-on-month. [203][208][221][230][235][243][251][254][264][266][273] Downstream Inventory - The inventory of PP production enterprises, traders, and ports has changed slightly. The inventory of PP powder materials has also changed slightly. The inventory of acrylonitrile factories and ports remains stable, while the inventory of phenol and acetone in Jiangyin Port has decreased. [277][288][290]