'With the continuous improvement of the financial derivatives market, derivatives tools have continued to evolve, and the operating philosophy and business model of the plastics industry chain have also undergone earth-shaking changes.' Shao Shiping, Assistant General Manager and General Manager, Chemical Business Unit, Zhejiang Mingri Holdings Co., Ltd. June The 2018 China Plastics Industry Conference held in Hangzhou on the 27th said.
At the meeting, Shao Shiping took the timeline as the context. He reviewed how the financial derivatives tool has played a subtle role in the development of the plasticization industry chain in recent years, thereby promoting the transformation and upgrading of the entire industry chain.
From the listing of DCE-LLDPE futures in 2007 to the use of the futures tool 'Xiao He's sharp point' in 2008, the pricing model based on futures prices has gradually become the mainstream of the industry. Market risk is managed based on futures tools. Also integrated into the daily operations of the enterprise, the plastics industry using futures has unwittingly gone through more than a decade.
Ten years of wind and rain
In 2007, the listing of Daicom LLDPE futures has played a milestone role in the participation of upstream, midstream, and downstream companies in the plastics and chemical industry in price risk management. According to Shao Shiping, before 2008, the plastics industry adopted a traditional trade model based on purchasing and sales. , Industry's awareness and participation in futures are not high. But in 2008, this phenomenon was changed.
'The financial crisis in 2008 sounded a warning bell for corporate management and management. Everybody still has a fear. Under such circumstances, the demand for futures risk aversion has become increasingly prominent. In 2009, the listing of PVC futures by DCE further enriched the use of plasticizing companies. The financial derivatives tool. The characteristics of the plastics industry is that prices have gone up and down. Industrial chain companies have survived in the cracks.' Shao Shaoping pointed out.
Zhejiang Sibang Chemical Co., Ltd. is the earliest company in the domestic base transaction. Chen Yufeng, general manager of the company, stated that it has been using futures tools for the past five years and used it as a core tool for trade. 'Now we must do commodity trading business. Well, from our perspective, innovation is already difficult. Based on the core business of trading, if you use futures, options tools, you may be doing a little innovation or doing something for the industry.
From 2014 to 2015, it was a leap-forward year for the plastics industry to use futures tools. The price discovery function of futures effectively guided the industry's cyclical linkage.
'In 2014, polypropylene futures were listed, diversifying the variety of financial derivatives instruments, and once again increased the risk management tools of plasticizing enterprises. At that time, international crude oil prices fell sharply, most of the commodities in the energy sector maintained a trend of decline, and the price fluctuations were relatively large. , Buying hedges as the main trade model is popular in the market. ' Shao Shiping said.
Wang Qiang, vice president of Huatai Futures Co., Ltd., said that the risk management needs of the market actually exist objectively. With the introduction of various policies, it is also reasonable and reasonable to grow rapidly.
Futures pricing into the mainstream
The traditional trade model was subverted in 2016. 'In 2016, basis trade became the trend of the entire plastics industry chain. Basis pricing has also become the focus of the market. Apart from industry circles customers are learning to use basis trading, there are also More investment institutions and futures companies are involved in the basis of base trade, and the market is becoming more and more mature and more rational, which has intensified professional competition. ' Shao Shiping said.
Shao Shiping stated that petrochemical ex-factory prices, futures disk prices, and spot market prices are always in a game, and financial pricing will gradually become a trend. 'This phenomenon has become increasingly prominent in 2017, the fundamental changes in the entire plastics industry or fundamentals Become the core of the entire price volatility of the futures market. '
Driven by the financial derivatives market, Shao Shiping pointed out that due to the increasingly frequent regional spreads, a unified national market is forming, and the price gap between various regions is increasingly narrowing, prompting upstream development of new products and high value-added products. Upgrading to meet the needs of downstream consumption and efforts are also echelon transformation and substitution.
'2018 is a combination of industry and finance, financial innovation year, with the promotion of futures and financial derivatives, especially options, by DCE, especially in the launch of OTC derivatives pilot projects last year, the trading model of rights trading has been increasingly The recognition of the industrial chain is gradually applied in this process. We will also participate in this project tomorrow. We will find in the course of the service of the industry chain that the rights-based trading of option hedging is very popular for the upstream. In the case of paying a certain amount of premium, the upstream can obtain the right to lock in the transaction price for a certain period of time to satisfy the balance of production and sales.
In recent years, pricing models based on futures prices have gradually become the mainstream of the plastics industry. Market risks based on futures tools management are also integrated into the company's daily operations. 'As the market continues to deepen understanding of futures tools, the plastics industry participates in futures from Traditional hedging has gradually evolved into new models such as off-exchange options and basis trading, which are now more flexible and tightly integrated. “Dai Shek Industrial Development Director Jiang Wei stated in his keynote address.
At present, the functions of the plastics futures market of DCE have been effectively brought into play, and have been deeply integrated into the overall transformation of domestic plastics and plastics industries. On the one hand, the current price correlations of the three major futures varieties of LLDPE, PVC and PP in 2017 were 0.92, 0.96 and 0.97, respectively. With some improvements, futures prices will further serve as the 'barometer' and 'vane indicator' of the plastics industry. On the other hand, the hedging effectiveness of the three major plastics futures varieties is getting better and better, and the hedging rate in 2017 will remain around 90%. Good level, plastic industry 'ballasting stone' effect highlights.
The vast world can be promising
'The plastics industry is both a traditional industry, has a long history, is also a modern new material, a strategic emerging industry, has a bright future. The plastics industry has played an important supporting role in the development of the national economy. While seeing achievements, we should also see China's plastics industry still suffers from unbalanced development, insufficient structural contradictions, oversupply of low-end and mid-range products, and insufficient supply of high-end products. However, there has been no fundamental change in the supply of high-end products. There is a rapid rise in costs in the economic operation of enterprises, and financing is difficult. There is no difficulty in fundamentally alleviating the financing, especially in recent years, when raw materials in the upper reaches have risen sharply, which has brought huge challenges to the development of the industry. 'The vice president of the China Light Industry Federation He Wei said.
'At present, all industries are facing the risk of market prices, especially in the period of economic growth slowdown, price risk management is an unavoidable issue for companies. The role of futures in evading risk of price fluctuations is self-evident.' The guests said.
On the basis of maintaining the continued function of market functions, DCE continues to explore new ideas and models for serving the entity industry.
'The new thinking is reflected in encouraging participants to directly use the hedging of the futures market to change to providing more tools, models, channels, guiding the indirect use of the futures market to do risk management, and transforming traditional methods from meetings and training to development. Industrial service innovation pilots provide direct real-world business opportunities for the physical industry, Jiang said.
Under the guidance of the above-mentioned new ideas, in 2014, Daishang, together with futures companies, brokers and banks, and other financial institutions, began to explore the launch of the OTC options industry pilot project. In 2015, the “insurance + futures” model was first introduced in 2017. Base trade trials. This year, more off-exchange options were launched for the plastics industry, and base trade trials are pushing the plastics industry forward.
In respect of OTC options, in 2017, under the joint participation of 21 futures companies, five securities firms and three banks, Dashang completed 42 pilot projects with a total of 225 transactions, including 27 agricultural product projects and 15 industrial products. The project involves 13 futures varieties. There are both traders such as the Tomorrow Holding Group and the chemical producers such as Yibin Tianyuan on the service subject.
Relevant market participants pointed out that OTC options business is 'insurance-like' products, with rich strategies and easy-to-understand advantages. It can provide customized services for corporate customers, avoiding shortcomings in the shortage of professional talents and financial pressure.
'The entity companies must do those simple options, do not do complex option structures. OTC options are premium products, not products with high risks or uncertain losses.' He pointed out that OTC options are still at the beginning At the stage, whether it is a trader or a client who provides OTC options, for the option trading strategy, the risk recognition needs a gradual deepening process.
Mature international commodity markets generally use futures prices as a reference for pricing. Basis trading is one of the important pricing models. For the domestic plastics market, traders and other industrial customers have gradually accepted and adopted basis trading pricing in recent years. There is still much room for development in the application of basis trade in related industries. In 2018, Dashang will continue to deepen the basis for trade pilots, encourage leading enterprises to participate, play a leading role in demonstration, and increase program design flexibility. The main body provides sufficient space. Through the base trade pilot and market cultivation activities, it will promote the market to better understand futures, understand futures and use futures.