1. Report Industry Investment Rating No information provided in the report. 2. Core Views of the Report - LPG prices mostly fluctuate following the trends of overseas propane and crude oil. This week, the PG market was mainly influenced by geopolitical factors and fluctuated with crude oil. With Iran being an important LPG supplier to China, the overall price trended strongly. After the US postponed military action against Iran on Friday, the risk premium was reversed [1][2]. - On the fundamentals, although the Iran issue has not had much substantial impact on PG, the overall shipping volume from the Middle East remains low, which will continue for some time and support import costs [2]. - In the domestic demand side, with the maintenance of PDH units this week, the marginal demand has weakened. Meanwhile, the profit calculated by FEI has returned to positive, and subsequent maintenance situations need to be monitored [2]. 3. Summary by Relevant Catalogs 3.1 Core Contradictions and Strategy Recommendations 3.1.1 Core Contradictions - Cost - end crude oil market fluctuates repeatedly. International crude oil faces the pressure of oversupply in fundamentals and is continuously affected by geopolitical risks. After the US suspended military action against Iran on Friday, the short - term risk premium was reversed [1]. - Overseas propane market is in a volatile state. The shipping volume in the Middle East remains low, and the US is in a state of inventory reduction with increased exports this week, but the absolute inventory level is still high, and the demand is significantly weaker year - on - year. As of Friday, the FEI premium is $37.75, and the CP premium is $29 [1]. - The domestic fundamentals are stable. The arrival volume at ports this week is still low, port inventories continue to decline, and the commercial volume of refineries remains at a relatively low level. On the chemical demand side, PDH maintenance increased this week, and the operating rate declined [1]. 3.1.2 Trading Strategy Recommendations - **Market Positioning**: The market is expected to be volatile. The price range of PG03 is between 3,800 - 4,400 yuan/ton [15]. - **Basis, Calendar Spread, and Hedging Arbitrage Strategy Recommendations** - **Basis Strategy**: The basis is expected to narrow in a volatile manner. The spot price is rising due to tight supply, and the futures price may experience valuation repair [15]. - **Calendar Spread Strategy**: The spread is expected to be volatile. It is recommended to conduct reverse arbitrage when the spread is high. The near - term is relatively strongly supported, but the long - term outlook is under pressure. Attention should be paid to the impact of geopolitical factors on the near - term [16]. - **Hedging Arbitrage Strategy**: Narrow the domestic - foreign price spread and widen the PP/PG price ratio when the price is low [16]. - **Recent Strategy Review** - Hold the 3 - 4 reverse arbitrage position and partially take profits [17]. - Keep the long - PP and short - PG position on hold. Although PDH maintenance has increased recently, the PP price has risen significantly due to cost factors, and the short - term unilateral upward space is limited. The PG price fluctuates greatly due to geopolitical disturbances, making it difficult to enter the market [17]. 3.1.3 Industrial Customer Operation Recommendations - **LPG Price Range Forecast**: The monthly price range of LPG is predicted to be between 3,800 - 4,400 yuan/ton, with a current 20 - day rolling volatility of 16.27% and a historical 3 - year volatility percentage of 12.77% [18]. - **LPG Hedging Strategy Table** - **Inventory Management**: For enterprises with high inventory worried about price drops, they can short PG futures according to their inventory to lock in profits and cover production costs. For example, short PG2603 with a hedging ratio of 25% at an entry range of 4,300 - 4,400 yuan/ton. They can also sell call options to collect premiums to reduce costs and lock in the selling price if the spot price rises. For example, sell PG2603C4400 with a hedging ratio of 25% at an entry range of 100 - 120 yuan [18][19]. - **Procurement Management**: For enterprises with low regular inventory and planning to purchase according to orders, they can buy PG futures at a low price on the futures market to lock in procurement costs. For example, buy PG2603 and PG2603P3800 with a hedging ratio of 25% at an entry range of 3,800 - 3,900 yuan/ton. They can also sell put options to collect premiums to reduce procurement costs and lock in the spot purchase price if the PG price drops. For example, sell put options with a hedging ratio of 25% at an entry range of 20 - 40 yuan [19]. 3.2 This Week's Important Information and Next Week's Key Events 3.2.1 This Week's Important Information - **Negative Information** - PDH maintenance increased this week. Jineng's 900,000 - ton and Wanhua's 900,000 - ton units are planned to be maintained until the end of the month, Satellite's 450,000 - ton unit had a short - term shutdown this week, and Zhongjing's 1,000,000 - ton unit had a one - week short - term shutdown [19]. - The US suspended military action against Iran, and the situation in Iran has cooled down in the short term [19]. 3.2.2 Next Week's Key Events - January 19: China's Q4 GDP [24]. - January 20: China's LPR [24]. - January 22: US PCE index [24]. 3.3 Disk Interpretation 3.3.1 Price - Volume and Capital Analysis - **Domestic Market** - **Unilateral Trend and Capital Flow**: This week, the PG03 contract fluctuated upwards. The net position of the main profitable seats increased slightly; there was no significant change in the top 5 long and short positions in the dragon - tiger list; the net short position of the profitable seats increased slightly; the net long position of foreign investors and retail investors increased slightly [21]. - **Technical Analysis**: This week, PG03 generally fluctuated upwards, oscillating between 4,000 - 4,300 yuan/ton on the daily chart. On the hourly chart, attention should be paid to the support around 4,100 yuan/ton [21]. - **Basis and Calendar Spread Structure**: This week, the LPG term structure remained in a BACK structure, and the 3 - 4 calendar spread was - 242 yuan/ton [26]. - **Overseas Market** - **Unilateral Trend**: FEI M1 closed at $526/ton (+$11), with a premium of $37.75/ton; CP M1 closed at $530/ton (+$6), with a CP premium of $29/ton; MB M1 closed at $321/ton (-$11). Affected by geopolitical factors this week, FEI and CP prices mainly increased, while the US fundamentals were relatively weak, and the price declined [28]. - **Calendar Spread Structure**: This week, the FEI M1 - M2 spread was $23/ton; the CP M1 - M2 spread was $17.5/ton; the MB M1 - M2 spread was $1.3/ton. The recent increase in the near - month price has put pressure on the MB near - month contract [37]. - **Regional Price Spread Tracking**: The weak fundamentals in the US have widened the price spread between FEI and MB. The easing of the situation in Iran in the Middle East has led to a greater reversal of the CP risk premium, and the price spread between CP and FEI has narrowed [39]. 3.4 Valuation and Profit Analysis 3.4.1 Up - and Downstream Profit Tracking in the Industrial Chain - **Upstream Profit**: This week, the gross profit of major refineries was 762 yuan/ton (+85 yuan/ton), and the gross profit of Shandong local refineries was 280 yuan/ton (-89 yuan/ton). The profit of local refineries continued to shrink [43]. - **Downstream Profit**: The PDH profit based on FEI cost was +88 yuan/ton, and the PDH profit based on CP cost was - 218 yuan/ton. The profit calculated by FEI has returned to positive. The MTBE gas separation profit was - 69 yuan/ton, the isomerization profit was - 34 yuan/ton, and the alkylated oil profit was - 265 yuan/ton. The profits fluctuated slightly [45]. 3.4.2 Import - Export Profit Tracking This week, the import profit was in a volatile state [49]. 3.5 Supply - Demand and Inventory 3.5.1 Overseas Supply - Demand - **US Supply - Demand** - **EIA Weekly Supply - Demand**: This week, production remained stable, demand was still relatively high, exports recovered, and inventories continued to decline, but the overall inventory level was still relatively high [56]. - **KPLER Export Situation**: In 2025, the US exported a total of 68,283 kt of LPG, a year - on - year increase of 2.52%. Among them, exports to China were 10,187 kt, a year - on - year decrease of 43%. Weekly exports have recovered this week [61]. - **Middle East Supply**: In 2025, the Middle East exported a total of 48,463 kt of LPG, a year - on - year increase of 2.43%. Among them, exports to India were 21,171 kt, a year - on - year decrease of 1.29%; exports to China were 17,905 kt, a year - on - year increase of 25.21%. Weekly shipping volume in the Middle East has been low in recent weeks but has slightly improved [65]. - **India Supply - Demand**: From January to December, India's total LPG demand was 331,774 kt, a year - on - year increase of 6.67%. In 2025, LPG imports were 23,229 kt, a year - on - year increase of 8.12%. There is still expected to be an increase in 2026, but the growth rate is expected to be limited [70]. - **South Korea Supply - Demand**: The seasonality of South Korea's LPG demand is not obvious, as most of it is used in the chemical industry. In 2025, South Korea imported a total of 8,434 kt of LPG, a year - on - year decrease of 2.56%. Recently, the cracking economy of LPG relative to naphtha has not been good [81]. - **Japan Supply - Demand**: Japan is highly dependent on LPG imports, and the proportion of combustion demand is large, so the seasonality of demand and imports is obvious. It is expected that imports will increase as the weather gets cooler. After restocking in August, imports decreased in September, and overall, imports in August and September were neutral. Imports increased again in October. Normally, from November to February of the next year, the average monthly import volume is around 1,000 kt. From January to December 2025, Japan imported a total of 10,105 kt of LPG, a year - on - year decrease of 2.58% [84]. 3.5.2 Domestic Supply - Demand - **Domestic Supply - Demand Balance** - **Supply**: With high refinery profits, the domestic LPG production is expected to remain at a high level, but the overall external sales volume is not high. According to shipping data, the import volume is not high [89]. - **Demand**: Based on profit and seasonal performance, chemical demand has decreased, while combustion demand has increased. Overall, the chemical demand in the fourth quarter was better than expected [89]. - **Inventory**: The overall inventory is decreasing, mainly at the port end [90]. - **Domestic Supply**: The operating rate of major refineries is 77.24% (+0.26%); the operating rate of independent refineries is 53.91% (-0.66%), and the utilization rate excluding large refineries is 49.77% (-0.74%). The domestic LPG external sales volume is 51.87 tons (+0.06 tons), and the arrival volume is 53.9 tons (+1.1 tons). In terms of inventory, the refinery storage capacity utilization rate is 23.15% (-0.66%), and the port inventory is 202.78 tons (-10.42 tons) [93]. - **Domestic Demand** - **PDH Demand**: Jineng's 900,000 - ton and Wanhua's 900,000 - ton units are planned to be maintained until the end of the month, Satellite's 450,000 - ton unit had a short - term shutdown this week, and Zhongjing's 1,000,000 - ton unit had a one - week short - term shutdown [104]. - **MTBE Demand**: This week, Shandong Chengtai and Yuhuang Shengrong continued their maintenance, and Dongfang Hongye resumed production. The domestic - foreign price spread has widened [107]. - **Alkylated Oil Demand**: There were no changes in the units this week [114]. - **Combustion Demand**: No specific information provided other than related to the seasonal charts [116].

Report Industry Investment Rating - Not provided Core View of the Report - The PP is expected to remain weak due to limited overall fundamental support at the end of the year, with the cost - end PDH profit at a new low, but the upstream's weak willingness to cut production. Attention should be paid to the marginal changes of PDH units under deep PDH profit losses [2] Summary by Relevant Catalogs Fundamental Tracking - **LLDPE Futures Data**: The closing price of PP2605 was 6266, with a daily decline of 0.19%. The trading volume was 405723, and the open interest decreased by 3751 [1] - **LLDPE Basis and Spread Data**: The basis of the 05 contract was -146, compared with -158 the previous day. The 05 - 09 contract spread was -19, compared with -22 the previous day [1] - **LLDPE Spot Price Data**: The spot prices in North China, East China, and South China were 6050 yuan/ton, 6120 yuan/ton, and 6210 yuan/ton respectively. The prices in North China increased by 30 yuan/ton compared with the previous day, while the price in South China decreased by 10 yuan/ton, and the price in East China remained unchanged [1] Spot News - The futures market fluctuated. Near the end of the month, the on - site spot resources were limited, and some offers of holders rose slightly. Downstream buyers were highly cautious and had a low willingness to purchase the resources after the price increase. The market trading atmosphere was weaker than the previous day. The warehouse receipts remained at a high level, and new downstream orders were insufficient. Some PDH units plan to shut down in January, but the scale is not large yet. The end - of - year demand lacks flexibility, and the industry's willingness to hold goods is limited in the continuous decline, putting pressure on the basis. The prices in the PP US dollar market partially declined. Overseas suppliers were not enthusiastic about offering to China, and downstream buyers continued to make purchases based on rigid demand, with little improvement in trading [1] Market Condition Analysis - **Cost Side**: Crude oil is expected to continue to fluctuate narrowly, providing limited support to the PP cost side. The chemical allocation in the market is differentiated, and the hedging logic between aromatics and olefins is continuously strengthened [2] - **Supply Side**: There will be no new production before the 2605 contract, and the game between existing supply and demand intensifies [2] - **Demand Side**: New downstream orders are weakening, and downstream factories are still cautious in purchasing, resulting in weak demand [2] Trend Intensity - The trend intensity of PP is 0 [3]

1. Report Industry Investment Rating - Not provided in the document 2. Core Viewpoints of the Report - LPG prices mostly fluctuate following the trends of overseas propane and crude oil. Recently, the domestic PG has been affected by both current and expected factors. The current domestic fundamentals are moderately strong with continuous inventory reduction at ports and high PDH operation rates. However, in the future, overseas supply remains resilient, and domestic PDH profits are under significant pressure, with some enterprises expected to undergo maintenance. There is still short - term support, and marginal changes should be monitored [2] 3. Summary by Relevant Catalogs 3.1 Core Contradictions and Strategy Recommendations 3.1.1 Core Contradictions - Cost - end: The international crude oil market is volatile. It faces the pressure of oversupply and is continuously affected by geopolitical risks. This week, it continued to rebound at the beginning of the week due to the US - Venezuela issue and was mostly volatile in the second half of the week [1] - Overseas propane: The overseas propane market is relatively strong. In the US, shipments were low this week due to fog and holidays, and in the Middle East, the shipment volume remained at a low level, with the tight supply situation continuing. This week, FEI and CP prices continued to rise, with FEI premium at 18.75 and CP premium at 50, indicating structural support in the international market [1] - Domestic fundamentals: The domestic supply side saw a low arrival volume this week, and port inventories continued to decline. On the chemical demand side, the PDH operation rate increased to 76.32% this week, but the industry has been in a deep loss state. There are rumors that some PDH enterprises plan to undergo maintenance, and the actual maintenance situation should be monitored [1] 3.1.2 Trading Strategy Recommendations - Market positioning: Volatility. The price range for PG02 is 3800 - 4400 [20] - Basis strategy: Volatility [20] - Recent strategy review: Go short on PG2 - 3 spread at high prices; Hold the position of buying PP and shorting PG, as PDH is in a continuous loss state. Pay attention to the negative feedback. It is expected that some enterprises will undergo maintenance in the first quarter. Pay attention to widening the spread between 05PP and 03PG [20][21] - Monthly spread strategy: Volatility. Go short on the spread at high prices [23] - Hedging and arbitrage strategy: Narrow the internal - external price difference and widen the PP/PG price ratio at low prices [23] 3.1.3 Industrial Customer Operation Recommendations - LPG price range forecast: The price range is 3800 - 4400, the current volatility (20 - day rolling) is 18.73%, and the historical percentage of the current volatility (3 - year) is 21.34% [22] - Hedging strategy: For inventory management, when inventory is high and worried about price decline, short PG2602 futures to lock in profits and sell call options (PG2601C4400) to collect premiums. For procurement management, when the regular inventory is low and procurement is based on orders, buy PG2602 futures at low prices to lock in procurement costs and sell put options (PG2602P3900) to collect premiums [22] 3.2 This Week's Important Information and Next Week's Attention Events 3.2.1 This Week's Important Information - Bullish information: Overseas supply remains tight, and prices are strong, providing relative support. The domestic fundamentals are still relatively strong, with port inventories declining again after the decrease in arrival volume, and short - term PDH demand remaining stable, with the operation rate rising to 76.32% this week [24] - Bearish information: PDH is in continuous loss, and there are still expectations of maintenance [25] 3.2.2 Next Week's Important Events - On December 31, the Fed will release the minutes of the monetary policy meeting; On December 31, China's December PMI will be released [29] 3.3 Disk Interpretation 3.3.1 Price - Volume and Capital Interpretation - Domestic market: The PG02 contract fluctuated and rose this week. The net position of the main profitable seats decreased slightly; 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 increased slightly; the net long position of foreign capital increased slightly, and the net short position of retail investors increased slightly. Technically, PG02 was mostly volatile this week, oscillating between 4000 - 4200 on the daily chart [27] - Overseas market: FEI M1 closed at $522/ton (+$10), with a premium of $18.75/ton; CP M1 closed at $514/ton (+$10), with a CP premium of $50/ton; MB M1 closed at $342/ton (+$4). This week, the swaps rebounded in tandem with the rebound of crude oil, and the shipments from the US and the Middle East continued to be at a low level [33] 3.3.2 Basis - Monthly Spread Structure - Domestic: The monthly spread of LPG still showed a BACK structure, with the 1 - 2 monthly spread at 158 yuan/ton (+39) [31] - Overseas: This week, the FEI M1 - M2 spread was $21.54/ton (+$1.54); the CP M1 - M2 spread was $5.66/ton (-$0.87); the MB M1 - M2 spread was $1.3/ton (unchanged) [42] 3.4 Valuation and Profit Analysis 3.4.1 Up - and Downstream Profit Tracking in the Industrial Chain - Upstream profit: This week, the main refinery's gross margin was 664 yuan/ton (+50), and the Shandong local refinery's gross margin was 428 yuan/ton (-43). The profit fluctuated little this week [48] - Downstream profit: The PDH profit based on FEI cost was - 346 yuan/ton (-73), and the PDH profit based on CP cost was - 529 yuan/ton (-44). PDH has been in continuous loss. The MTBE gas - fractionation profit was - 81 yuan/ton (-1), the isomerization profit was - 252 (+13), and the alkylated oil profit was - 469 yuan/ton (+41). The recent profit fluctuations were small [50] 3.4.2 Import - Export Profit Tracking - This week, the overseas spot price strengthened again, while the domestic imported gas price remained stable, compressing the import profit again [53] 3.5 Supply - Demand and Inventory 3.5.1 Overseas Supply - Demand - US supply - demand: This week, the production decreased slightly, demand was weak recently, and exports were low due to fog and holidays. Overall, inventory was slowly decreasing. From January to November, the US exported a total of 62,703 kt of LPG, a year - on - year increase of 3.09%, with 9,693 kt shipped to China, a year - on - year decrease of 40% [56][63] - 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%, with 19,238 kt shipped to India, a year - on - year decrease of 1.55%, and 16,833 kt shipped to China, a year - on - year increase of 27%. In November, domestic demand in the Middle East was strong, and shipments were generally low. Weekly data showed that Middle Eastern shipments have remained low in recent weeks [66] - Indian supply - demand: From January to November, India's LPG demand totaled 30,101 kt, a year - on - year increase of 6.26%, and 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, with demand and imports remaining high [71] - South Korean supply - demand: The seasonality of South Korea's LPG demand is not obvious, with most used in 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 at the cracking end. Currently, the propane cracking profit is still better than that of naphtha, and imports are expected to remain at a relatively high level. Some cracking maintenance has continued until December, and the cost - effectiveness of LPG cracking has decreased. South Korea's LPG imports in November increased slightly compared to October but were still at a low level, and the import volume has recently rebounded [82] - Japanese supply - demand: Japan is highly dependent on imported LPG, and the proportion of combustion demand is large, so the seasonality of demand and imports is relatively obvious. It is expected that imports will increase as the weather gets colder. After restocking in August, imports decreased in September, and overall, imports in August and September were moderate. Imports increased again in October. Normally, the average monthly import volume from November to February of the following year is around 1,000 kt [90] 3.5.2 Domestic Supply - Demand - Domestic supply - demand balance: Supply: With high refinery profits, the domestic LPG production is expected to remain at a high level, but the overall external supply volume is not high; from the shipping data, the import volume is not expected to be high. Demand: Based on profit and seasonal performance, chemical demand is decreasing, and combustion demand is increasing. Overall, the chemical demand in the fourth quarter was better than expected. Inventory: Overall, inventory is decreasing, mainly at ports [94] - Domestic supply: The operating rate of main refineries was 75.11% (unchanged), the operating rate of independent refineries was 56.22% (+0.32%), the utilization rate excluding large - scale refineries was 52.32% (+0.35%), the domestic LPG external sales volume was 52.44 tons (+0.61), and the arrival volume was 31.3 tons (-36.4). In terms of inventory, the factory storage capacity utilization rate was 24.06% (+0.41%), and the port inventory was 233.73 tons (-27.34) [97] - Domestic demand: PDH demand: Juzhengyuan and Shandong Binhua restarted and increased production. This week, Shandong Chengtai and Yuhuang Shengrong continued their maintenance. The internal - external price difference continued to shrink. MTBE demand: The operating rate and export situation need attention. Alkylation oil demand: Hubei Yuchu restarted this week, and others continued as before. Combustion demand: Attention should be paid to the sales - production ratio in different regions [107][110][116]

Report Industry Investment Rating - The report does not provide an industry investment rating. Core Viewpoints - This week, the LPG price was mainly affected by the weakening domestic fundamentals, with an increase in supply and a decrease in demand expectations, leading to a significant decline in the disk price. However, the price rebounded slightly on Friday night due to the influence of the SASAC's "anti - involution" policy, and the market volatility increased [2][6]. - In the short - term, the LPG market is expected to be in a volatile state, with the price range of PG01 predicted to be between 4000 - 4500 yuan/ton [16]. - In the long - term, the LPG market is affected by multiple factors on both the supply and demand sides. The supply pressure from the US is relatively large, while the demand in different regions shows different characteristics [13]. Summary by Directory Chapter 1: Core Contradictions and Strategy Recommendations 1.1 Core Contradictions - Cost - end: Crude oil was under the pressure of oversupply and geopolitical issues, and it oscillated weakly this week but remained within the oscillation range [1]. - Overseas market: It was relatively strong. US demand increased and inventory decreased, while Middle - East shipments remained at a low level. The FEI premium was $37.25, and the CP premium was $42 [1]. - Domestic fundamentals: They weakened slightly. The supply increased due to the rise in arrivals, and port inventory accumulated. On the demand side, although PDH started to operate at a higher rate due to the resumption of production in some enterprises, there were rumors of maintenance plans, and the demand expectation weakened. The number of warrants increased to 5476 this week [1][6]. 1.2 Trading - type Strategy Recommendations - Market positioning: Oscillation, with the price range of PG01 at 4000 - 4500 yuan/ton [16]. - Basis strategy: Oscillation. The basis strengthened as the disk price fell from its high this week [16]. - Spread strategy: Reverse arbitrage (3 - 4) at high prices [16]. - Hedging and arbitrage strategy: Narrow the internal - external spread and widen the PP/PG ratio at low prices [16]. 1.3 Industrial Customer Operation Recommendations - LPG price range forecast: 4000 - 4500 yuan/ton, with a current volatility of 23.00% and a historical percentage of 40.18% in the past 3 years [17]. - Hedging strategy: For inventory management, when inventory is high, short PG futures and sell call options; for procurement management, when inventory is low, buy PG futures and sell put options [17]. Chapter 2: This Week's Important Information and Next Week's Attention Events 2.1 This Week's Important Information - Positive factors: The Fed cut interest rates by 25BP as expected, and the overseas market remained tight with high premiums [24]. - Negative factors: The number of warrants increased to 5476, and the PDH maintenance expectation increased [24]. 2.2 Next Week's Attention Events - On December 16, pay attention to the US unemployment rate; on December 18, pay attention to the US CPI year - on - year. Also, focus on the further implementation of high - energy - consumption project control [24]. Chapter 3: Disk Interpretation Unilateral Trend and Capital Movement - The PG01 contract oscillated and declined this week. The net positions of major profitable seats decreased slightly, and the long positions of the top 5 in the order book decreased significantly, while the short positions of the top 5 remained unchanged. The net short positions of powerful seats decreased slightly, and the net long positions of foreign investors decreased slightly while those of retail investors increased slightly [21]. Basis and Spread Structure - The LPG term structure remained in a BACK structure this week, with the 1 - 2 spread at 84 yuan/ton (+5) [25]. - In the overseas market, the FEI M1 - M2 spread was $19/ton (+6); the CP M1 - M2 spread was $9/ton (+4.5); the MB M1 - M2 spread was $2.9/ton (-3.25). FEI and CP were generally suitable for positive arbitrage [37]. Chapter 4: Valuation and Profit Analysis Upstream Profits - The gross profit of major refineries was 645 yuan/ton (+52), and that of Shandong independent refineries was 443 yuan/ton (-12). The profit fluctuations were not significant this week [42]. Downstream Profits - The PDH profit calculated by FEI was - 237 yuan/ton (+109), and that calculated by CP was - 553 yuan/ton (+16), indicating continuous losses. The MTBE gas - separation profit was - 63.75 yuan/ton (-1.25), the isomerization profit was - 188 yuan/ton (-138), and the alkylation oil profit was - 473 yuan/ton (-61) [44]. Chapter 5: Supply, Demand, and Inventory 5.1 Overseas Supply and Demand - US supply and demand: With the cooling weather, weekly demand improved significantly, but production was relatively high, and inventory decreased at a normal rate. From January to November, US LPG exports increased year - on - year, but the volume to China decreased [52][57]. - Middle - East supply: From January to November, Middle - East LPG exports increased year - on - year. Shipments were low in November due to high domestic demand [60]. - Indian supply and demand: From January to November, India's LPG demand and imports increased year - on - year. The second half of the year was the peak season, with high demand and imports [62]. - South Korean supply and demand: The seasonality of LPG demand was not obvious. The import volume was expected to remain at a relatively high level, but there was a slight increase in November and a recent rebound [65]. - Japanese supply and demand: Japan was highly dependent on LPG imports, and the demand and import seasonality were obvious. The import volume was expected to increase with the cooling weather [68]. 5.2 Domestic Supply and Demand - Supply: With high refinery profits, domestic LPG production was expected to remain at a high level, but the external supply volume was not high, and the import volume was also low [72]. - Demand: Based on profit and seasonality, chemical demand decreased while combustion demand increased. The chemical demand in the fourth quarter was better than expected [72]. - Inventory: There was a slight reduction in overall inventory, mainly at the port [73].

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].

Report Industry Investment Rating - Not provided Core View - The domestic LPG market is expected to continue a narrow - range oscillating trend. International LPG prices are weak, with a significant increase in warehouse receipts suppressing the market. Although domestic chemical demand is increasing, weak combustion demand restricts upward movement [1]. Summary by Relevant Content Price and Market Data - On Monday, the cheapest deliverable was East China civil LPG at 4413 yuan/ton. FEI and CP prices dropped, PP prices declined sharply, and the production profit of FEI and CP for PP worsened, with CP having a lower production cost than FEI. The PG market weakened, with the 08 - 09 spread at - 7 and the 08 - 10 spread at - 411. The US - to - Far East arbitrage window closed [1]. - The PG market oscillated. The basis weakened to 370 (-63), and the inter - month reverse spread continued to strengthen. Warehouse receipt registrations reached 9804 lots (+1000), with Qingdao Yunda adding 1000 lots. External market prices continued to weaken, and the oil - gas ratio declined [1]. Regional and Spread Data - In terms of regional spreads, PG - CP reached 43 (+18), FEI - MB was 155 (-6), FEI - CP was 4.5 (+4.5), and the US - Asia arbitrage window closed. FEI propane discount continued to fall, and the CP arrival discount oscillated. FEI - MOPJ changed little, at - 47.5 (-3.75) [1]. Profit and Demand Data - PDH profit improved, while MTBE export profit declined. The arrival volume decreased significantly. Chemical demand was strong; PDH operating rate increased significantly to 73.13% (+2.01 pct), and next week, Liaoning Jinfa plans to resume operation. Alkylation operating rate increased, and Henan Chengxin's alkylation unit has a restart plan. MTBE operating load increased, with manufacturers focusing on exports and overall stable operation. Combustion demand was weak [1].

Group 1: Report Industry Investment Rating - No relevant content provided Group 2: Report's Core View - PG futures prices have been oscillating downward. Although the chemical demand outlook is relatively strong, the decline in oil prices and the weakening of international LPG prices have led to a weaker futures market. The cheapest deliverable is East China civil LPG at 4486. The basis has strengthened to 433 (+93). The inter - month reverse arbitrage has strengthened due to weak spot prices and the shift of the main contract. The number of registered warrants is 8804 lots (+500), with 500 lots added by Qingdao Yunda. The external market prices have continued to weaken, and the oil - gas ratio has increased. [1] - Despite the strong chemical demand expectations, under the suppression of weak combustion demand, the domestic LPG market is expected to continue the narrow - range oscillating trend. [1] Group 3: Summary by Related Catalogs Daily Data Summary - On July 18, 2025, the prices of South China LPG, East China LPG, and Shandong LPG were 4530, 4486, and 4610 respectively. The propane CFR South China was 553, propane CIF Japan was 505, MB propane spot was 71, and CP forecast contract price was 538. The price of Shandong ether - after carbon four was 4890, and Shandong alkylated oil was 8000. The daily changes were - 40, 0, 20, - 2, - 2, 1, - 8, 40, 80 respectively. The PG futures price decreased, the monthly spread declined, and the 08 - 09 spread was 63. The US - Far East arbitrage window opened. [1] Weekly View Summary - **Market Trend**: The PG futures market oscillated downward. The domestic LPG market is expected to continue the narrow - range oscillation due to weak combustion demand, despite strong chemical demand expectations. [1] - **Basis and Spread**: The basis strengthened to 433 (+93), and the inter - month reverse arbitrage strengthened. The number of registered warrants increased to 8804 lots (+500). [1] - **External Market**: The external market prices continued to weaken, and the oil - gas ratio increased. The regional spreads such as PG - CP, FEI - MB, FEI - CP, and FEI - MOPJ changed, and the US - Asia arbitrage window opened. [1] - **Profit Situation**: The PDH profit improved, while the MTBE export profit declined. [1] - **Inventory and Supply**: Port inventories increased significantly, and factory inventories increased slightly. The commodity volume decreased by 0.98% due to reduced supply in South China, increased self - use in Shandong, and limited supply in East China. [1] - **Chemical Demand**: Chemical demand is strong. The PDH operating rate increased significantly to 71.78% (+10.91pct), and the alkylation operating rate increased. MTBE export orders increased. [1]

Report Summary 1) Report Industry Investment Rating - Not provided 2) Core Viewpoints - The cheapest deliverable is Shandong civil gas at 4580. PP prices fluctuate, FEI and CP prices decline, CP discount remains unchanged, PDH production profit improves, and FEI production cost is higher than CP. The PG futures market weakens, the monthly spread changes little, and the 08 - 09 spread is 95. The US - Far East arbitrage window closes [1]. - Civil gas prices rise first and then fall. Geopolitical tensions at the beginning of the week lead to a bullish market, but overall supply is abundant, high prices are resisted by downstream, and the easing of the Middle - East situation causes a sharp drop in oil prices, pressuring the market later in the week. The PG futures market falls sharply, the basis strengthens to 345, and the monthly spread changes little. External market prices weaken significantly, and the oil - gas ratio first suppresses and then rises. The internal - external price difference drops significantly, PG - CP weakens to - 4 (-33), FEI - CP weakens significantly, and the US - Asia arbitrage window closes. Import prices drop significantly, AFEI propane discount drops slightly, and CP propane - butane discount drops significantly. PDH spot production profit improves, paper - based production profit rises, FEI is lower than CP; alkylation oil profit rises significantly; MTBE gas - fractionation etherification profit is basically flat, isomerization etherification profit increases; FEI - MOPJ moves up [1]. - Fundamentally, increased arrivals lead to port inventory accumulation; factory inventory accumulates slightly with regional differentiation, East China destocks, and South China and Shandong accumulate inventory; external sales increase; PDH operating rate rises to 70.54% (+4.33 pct), alkylation operating rate is 46.02% (-1.84 pct), and MTBE production remains basically flat. The number of registered warrants is 8358 lots (+0). Next week, PDH and alkylation operating rates are expected to rise slightly, combustion demand remains weak, low prices stimulate sales, and subsequent prices will generally stabilize [1]. 3) Summaries by Related Catalogs Price Data - From June 24 - 30, 2025, prices of South China LPG, Shandong LPG, Shandong ether - post C4, and other related products change. For example, South China LPG prices range from 4710 - 4755, Shandong LPG prices range from 4599 - 4667 [1]. Market Conditions - Futures market: The PG futures market weakens, and the monthly spread changes little [1]. - External market: FEI and CP prices decline, and the US - Far East and US - Asia arbitrage windows close [1]. - Spot market: Civil gas prices show a trend of rising first and then falling [1]. Profit and Cost - PDH production profit improves, and FEI production cost is higher than CP. PDH spot production profit improves, and paper - based production profit rises [1]. Inventory and Production - Port inventory accumulates due to increased arrivals, factory inventory accumulates slightly with regional differentiation. PDH operating rate rises to 70.54% (+4.33 pct), and alkylation operating rate is 46.02% (-1.84 pct) [1].

Group 1: Report Industry Investment Rating - No industry investment rating is provided in the report. Group 2: Core Viewpoints - The supply increase is expected, while the expected increase in chemical demand provides some support. Shandong is expected to be boosted, and East and South China markets are more likely to fluctuate. Geopolitical tensions have significantly escalated, with the US attacking three Iranian nuclear facilities, which is expected to have a significant impact on market sentiment, so cautious operation is recommended [1]. Group 3: Summary by Relevant Data Price and Margin Data - From June 20 - 26, 2025, the prices of South China LPG, Shandong LPG, and other products fluctuated. For example, South China LPG prices ranged from 4660 to 4755. There were also changes in propane CFR prices, MB propane prices, etc. PDH production profit improved, with FEI production cost higher than CP. The daily change on June 26 showed 0 for South China LPG, -25 for Shandong LPG, etc. [1] Market Structure Data - The cheapest deliverable is East China civil gas at 4642. The PG futures price increased, with the 07 - 09 spread dropping 3 to 107. The US - Far East arbitrage window is closed. The 07 contract basis weakened to 80 (-141), and the monthly spreads (07 - 08, 07 - 09) changed significantly [1]. International Market Data - Outer - market prices continued to strengthen, and the oil - gas ratio increased. Regional spreads showed different trends: internal - external spreads strengthened, FEI - MB strengthened slightly, while FEI - CP and MB - CP weakened. The AFEI propane FOB discount weakened slightly to 2.25, and the CP CIF discount dropped significantly to 12 dollars. Freight rates increased slightly [1]. Downstream Profit Data - PDH spot profit improved due to rising拉丝 prices. FEI's profit from producing PP decreased, while CP's production profit increased. Alkylation and MTBE profits decreased, and the FEI - MOPJ spread shifted downward [1]. Fundamental Data - Due to delayed arrivals and a slight increase in chemical demand, port inventories and storage ratios decreased, while factory inventories remained basically flat, and external releases were also basically unchanged. Chemical demand was supported, with PDH and MTBE operating rates increasing and alkylation remaining basically flat. Multiple PDH plants are expected to increase their loads in the future [1]. Warehouse Receipt Data - The number of registered warehouse receipts was 8358 lots (-647), mainly due to Jinneng Chemical reducing by 270 and Shanghai Yuchi reducing by 377 [1].

Report Summary 1) Report Industry Investment Rating No information provided. 2) Core Viewpoints - The civil gas price first rose and then fell due to continuous disruptions in international supply, sufficient domestic supply, and weak demand. The PG futures price strengthened significantly unilaterally due to geopolitical shocks, with the basis of the 07 contract weakening and the monthly spread weakening significantly. Outer - market prices continued to strengthen, and the oil - gas ratio increased. [1] - Geopolitical tensions have significantly escalated with the US attacking three Iranian nuclear facilities, which is expected to have a large impact on the sentiment side, so cautious operation is recommended. [1] - In terms of fundamentals, port arrivals are delayed, chemical demand has slightly increased, port inventories and storage capacity ratios have decreased, factory inventories are basically flat, and external sales are basically unchanged. Chemical demand is supported, with the operating rates of PDH and MTBE increasing and that of alkylation basically unchanged. [1] - Under the expectation of increased supply, the expected increase in chemical demand provides some support, with Shandong expected to be boosted and East and South China more likely to fluctuate. [1] 3) Summary by Relevant Catalog Daily Data - From June 19 to June 25, 2025, the prices of liquefied gas in South China, East China, and Shandong, as well as related prices such as propane CFR South China, propane CIF Japan, etc., showed different trends. For example, on June 25, the South China liquefied gas price was 4755, the East China liquefied gas price was 4667, and the Shandong liquefied gas price was 4750. The daily change in the Shandong liquefied gas price was - 60, and the daily change in the propane CIF Japan price was - 18. [1] - The 09 - month spread increased by 11 to 110. The US to Far - East arbitrage window is closed. The cheapest deliverable is East China civil gas at 4667. PP prices rose slightly, FEI and CP prices recovered, PDH production profits improved, and the FEI production cost is higher than that of CP. The PG futures price declined, and the basis of the 07 contract is affected. [1] Weekly Viewpoints - Civil gas prices first rose and then fell. The current cheapest deliverable is East China civil gas at 4657. The CFR prices of propane and butane in East and South China are basically the same. The PG futures price strengthened significantly unilaterally due to geopolitical shocks, with the 07 contract basis weakening to 80 (- 141), and the monthly spread weakening significantly (07 - 08 is 10, 07 - 09 is 195). Outer - market prices continued to strengthen, and the oil - gas ratio increased. [1] - In terms of regional spreads, the internal - external spread continued to strengthen, the FEI - MB spread strengthened slightly, while the FEI - CP and MB - CP spreads weakened. The US - Asia arbitrage window is closed. The AFEI propane FOB discount weakened slightly to 2.25, and the CP CIF discount dropped significantly to 12 dollars. Freight rates increased slightly. [1] - In terms of downstream profits, PDH spot profits improved due to the increase in drawing prices; the profit of producing PP with FEI decreased, while the profit of producing with CP increased; the profits of alkylation and MTBE decreased; the FEI - MOPJ spread decreased. [1] - Geopolitical tensions have significantly escalated, and it is expected to have a large impact on the sentiment side. [1] - In terms of fundamentals, port arrivals are delayed, chemical demand has slightly increased, port inventories and storage capacity ratios have decreased, factory inventories are basically flat, and external sales are basically unchanged. Chemical demand is supported, with the operating rates of PDH and MTBE increasing and that of alkylation basically unchanged. Multiple PDH factories are expected to increase their loads in the future, driving up the PDH operating rate. [1] - The number of registered warehouse receipts is 8358 lots (- 647), mainly due to a decrease of 270 in Jinneng Chemical and 377 in Shanghai Yuchi. [1]