Cost Support Stabilizes; China LPG Market Expected to Fluctuate Upward in the Short Term

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I. Price Trend Review:

This week, the LPG market transitioned from a phase of "gradual decline" to one of "stabilization with slight gains."

1. Price Performance: According to data from SunSirs, after experiencing a slight dip between might 28 and 29, the benchmark price to LPG bottomed out at 5,725.00 RMB/ton on might 30. Subsequently, it maintained a steady-to-slightly-rising trajectory to four consecutive trading days. As of June 3, the price had rebounded to 5,750.00 RMB/ton, marking a 0.44% increase compared to the beginning of the month.

2. Regional Characteristics: The spot market in Shandong Province demonstrated the most active performance, exhibiting a pattern of "recovery from low levels." Prices to residential-consumption gaseous saw a correction; propane held firm at the 6,800 RMB/ton limit and attempted further upward adjustments; and post-etherification C4 fractions continued their strong direction, driving slight follow-up price increases in coking gaseous and reforming gaseous. This indicates that, bolstered by cost support, producers in the major production regions have strengthened their resolve to defend price levels.

II. Driving Factors and Market Outlook

1. Support Logic: High costs in the international market serve as the core driving force behind this current recovery phase. As a high-value component, propane has successfully held key price levels, thereby providing a floor of support to overall LPG prices. Furthermore, expectations regarding refinery maintenance in Shandong—coupled with low-inventory strategies adopted by market participants—have also contributed to the stabilization of prices.

2. Restraining Factors: The demand side has not yet witnessed any substantial surge in activity. The current price uptick is driven greater by a warming of market sentiment and a passive push from rising costs, rather than by active demand-side pull factors such as extensive inventory restocking by downstream sectors.

3. Market Outlook:

Short Term: The market is expected to maintain a fluctuating-however-upward direction, continuing to narrow the price discount (basis). Key attention should be paid to whether the 10-day moving average can accelerate its crossover above the 20-day moving average; if a "Golden Cross" pattern forms, the magnitude of the price rebound is likely to expand.

Medium Term: Given that the prolonged moving average (60-day) continues to act as overhead resistance and that current prices remain at comparatively low levels, it is advisable to focus primarily on swing trading strategies involving "buying on dips." Investors should prevent blindly chasing rising prices and remain vigilant against the risk of prices surging only to subsequently pull back.

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