Since 2007, linear low-density polyethylene, polyvinyl chloride (PVC) and polypropylene (PP) futures have been listed on the Dalian Commodity Exchange. After 11 years of development and growth, China's plastics futures market has been ranked in the world. the first.
In the past 11 years, how has China's plastics futures gone? What has changed? At the just-concluded China Plastics Industry Conference, representatives of the conference said that the price discovery and hedging of futures provide an effective tool for industrial customers to hedge and price. The traditional trade pattern based on sales and marketing in the plastics industry has already changed in the subtle direction. The use of futures tools in the plastics industry has long been nothing new. How to optimize existing mechanisms, open up new models, and better enable futures tools to serve entities. The economy has become the most concerned issue.
From reference to benchmarking, subverting spot trade
'As the financial derivatives market continues to improve, financial derivatives tools continue to evolve, and we have changed the business model of the plastics industry chain, and the business model has undergone tremendous changes.' Shao Shiping, assistant general manager of Zhejiang Mingri Holdings Group and general manager of the chemical business unit, said .
According to reports, from the listing of LLDPE futures in 2007, to the use of futures tools by plastics companies in 2008, and now the pricing model based on futures prices has gradually become the mainstream of the plastics industry. Daily operation. At present, plastics companies use more than 70% of the basis trade in spot trade, and futures prices have won industry recognition.
'The traditional trade model was subverted in 2016. At that time, the basis trade became the tide of the entire plasticization industry chain. The basis price pricing became the focus of the market. In addition to the industry, customers are learning, using basis trading, and more. The investment institutions and futures companies have joined the ranks of the basis trade, the market is more and more mature, more and more rational, and the professional competition is intensifying. ' Shao Shiping said.
Shao Shiping said that the ex-factory price of petrochemical products, the disk price of futures, and the spot market price have been in the game, and financial pricing will gradually become a trend. In 2017, this phenomenon has become more prominent, and the fundamentals of the plastics industry have changed or fundamentals. The driving force has become the core of price fluctuations in the futures market. Driven by the financial derivatives market, the national unified large market is forming, and the spread between various regions tends to shrink, prompting the upstream development of new products, high value-added products, to meet downstream consumption. Efforts to upgrade and replace, are also echelon transformation and replacement.
'2018 is the year of integration of industry and finance, financial innovation. With the promotion of futures and financial derivatives by the big business, especially the large-scale commercial enterprises launched the pilot project on the OTC derivatives last year, the mode of trade with rights is becoming more and more Recognized by the industry chain. It is gradually being used in the accreditation process. We also participate in this project tomorrow. In the past three months, we have operated nearly 10,000 tons of trade-related trade volume. We are serving the industry chain. It is found that for the upstream, the possession trade of option hedging is very popular. In the case of paying a certain premium, the upstream can obtain the right to lock the transaction price for a certain period of time, satisfying the appeal of upstream production and sales balance. ' Shao Shiping pointed out.
Zhejiang Sibang Chemical Co., Ltd. is one of the earliest companies involved in the basis trade in China. Its general manager Chen Yufeng said that in recent years, they have been making futures and using them as a core tool of trade. Business is good, from our point of view, in fact, innovation has been very difficult. On the basis of the core business of trade, the use of futures, options tools, is an innovation, but also to do some services for this industry. 'He Say.
The meeting revealed that the function of the plastics futures market of the Dachs has been effectively integrated into the overall transformation of the domestic plastics industry. On the one hand, the current price correlations of the three LLDPE, PVC and PP futures varieties in 2017 are 0.92, 0.96 and 0.97 respectively. Compared with last year, the futures price further served as the 'barometer' and 'wind vane' of the plastics industry. On the other hand, the hedging efficiency of the three major plastics futures products is getting better and better, and the 2017 hedging rate is maintained at 90. A good level around %, the role of the 'ballast stone' in the plastics industry is evident.
Optimize the contract system to adapt to market changes
In 2017, the turnover of LLDPE, PVC and PP in the three major plastic products (unilateral, the same below) totaled 157 million hands, accounting for 14.3% of the total volume of the large business. Among them, PVC futures trading volume, daily average positions The volume was 39 million hands and 11.17 million hands, up 247% and 56% respectively.
According to reports, in recent years, PVC futures market transactions, positions increased significantly, mainly due to the implementation of the brand delivery system in 2015. In 2017, PVC futures added to the Inner Mongolia Erdos, Tangshan Sanyou two market-approved registered brands, effectively expand the delivery Scope. Currently, PVC futures have 13 registered brands including one exemption brand. In 2017, PVC futures hedged efficiency reached 92%, and the current price correlation reached 0.96, which is inseparable from the implementation of the registered brand system. .
In recent years, the fundamentals of domestic polyethylene (PE) and PP market have changed, and the production capacity has maintained double-digit growth for many years. Non-mainstream imports from Iran, Nigeria, the United States and other places have entered the domestic market with low price advantage. In addition, due to policy Influencing factors, China will gradually stop importing waste plastics, boosting the price of domestic recycled plastics, and driving up the cost of the entire plastics industry. Chen Wei, director of the Industrial Products Department of Dashang, said that in order to adapt to changes in the spot market, in-depth service to customers in the plastics industry, The company will continue to promote the optimization of the contract system and further reduce the cost of industrial hedging.
First, optimize the PVC futures delivery brand system. Strengthen brand management, dynamically adjust delivery brands, and entrust inspection agencies to inspect the products of registered brands in the market every year. The test results are an important basis for retaining registered brands, thus establishing marketization. The dynamic adjustment mechanism. At the same time, appropriately expand the scope of the exemption brand to promote the convenience of futures delivery. Second, the delivery of the brand system to LLDPE, PP varieties, the implementation of the exemption system for some mainstream brands recognized by the market, delivery brands are based on the exchange The relevant delivery brand system is identified. The third is to try the trader exemption system. The exchange authenticates the registered brand of the trader according to the relevant rules. The certified brand can be exempted from inspection. The fourth is to adapt to the changes in the spot pattern and plan to increase the number of places in Beijing as the delivery area. The fifth is to learn from the iron ore futures trader factory library system, promote the construction of traders' factory warehouse in the plastic futures market, and improve the delivery system. Sixth, to promote contract continuity, active in recent months, set up warehouse receipt service providers on plastic futures, encourage customers Participate in near-month contract transactions and improve the efficiency of corporate hedging.
While promoting the optimization of the contract system, DCC will continue to promote the construction of the OTC market, continuously optimize the upgrade transaction and clearing platform, develop more index products, encourage the promotion of point trade, OTC options and OTC swap business; Develop more new varieties, such as pushing ethylene glycol futures to market, researching styrene, pure benzene and other upstream raw materials and low-density polyethylene, high-density polyethylene and other finished products, providing more perfect and rich futures for the plastics industry. Variety system.
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'As the market continues to understand the futures tools, the plastics industry's participation in futures has gradually evolved from traditional hedging to off-exchange options, and new models such as basis trade. The combination is now more flexible and close. 'Da Shang Industrial Development Director Jiang Wei said.
In order to better adapt to the development and changes of the market, DCH has been committed to continuously innovating the futures model. In 2014, Diancai and futures companies, brokerages and banks and other financial institutions joined hands to explore the OTC option service industry pilot; 2015 Initiated the 'insurance + futures' model in the year; launched the benchmark trade pilot in 2017. This year, more out-of-the-box options and benchmark trade pilots were launched for the plastics industry, further promoting the combination of the plastics industry.
In the trial of OTC options, in 2017, 21 commercial companies, 5 brokerage companies and 3 banks participated in the completion of 42 pilot projects, a total of 225 transactions, including 27 agricultural products projects and 15 industries. The product project involves 13 futures varieties. On the service subject, there are traders such as Tomorrow Holding Group and chemical producers such as Yibin Tianyuan.
Market stakeholders pointed out that the OTC option business is a 'class insurance' product with strategic advantages and easy-to-understand advantages. It can customize services for corporate customers, avoiding shortcomings in the shortage of professional talents and financial pressure.
For example, in order to stabilize the supply and demand relationship with downstream users, a PVC trader adopts the sales model of 'first re-pricing' to give the downstream factory price protection, 'the price does not rise, the price falls and falls'. In this mode, The trader will face the risk of market price fluctuations. On January 3, 2018, traders judged that the market price will fall, but the short-term decline is limited, so buy a bear market spread option to avoid price risk, that is, buy execution price of 6,750 yuan / T, a 50-day V1805 put option, sells an execution price of 6,150 yuan / ton, a 50-day V1805 put option. On February 22, the V1805 price fell to 6,535 yuan / ton, traders exercised and obtained 172,000 yuan Payouts.
'Entity companies must make simple options, don't make complex option structures. OTC options are products with premiums, not products with high risk or uncertainty.' Jiang Wei reminds that OTC options are still in the market. In the initial stage, whether it is a trader who provides OTC options services or a customer, for the option trading strategy, the risk awareness needs a step-by-step process.
In terms of basis trade, Dianchao continued to deepen the pilot of benchmark trade, encourage leading enterprises to participate, improve the flexibility of program design, and provide sufficient space for participants; promote market awareness through benchmark trade pilots and market cultivation activities. Futures, understanding futures and using futures.
According to the reporter's understanding, the application of basis trade is divided into three stages. In the first stage, enterprises only use futures prices to price and do not participate in futures. In the second stage, enterprises actively participate in the futures market, using futures prices plus rising discounts. The way to develop trade prices, to promote the two sides to conclude transactions, manage risks. In the third stage, the company obtains higher industry profits through the basis, and achieves a reasonable distribution of profits between the various links of the industry chain.
In the basis trade, the two parties lock the future supply relationship by signing contracts with premiums and discounts, hedge and price in the futures market, transfer the risk of price fluctuations to the futures market, and realize the separation between pricing and transactions. Both sides achieve a win-win situation.
The reporter learned that mature international commodity markets generally use futures prices as pricing reference. Basis trade is an important pricing model. For the domestic plastics market, in recent years, traders and other industrial customers have gradually accepted and adopted the pricing of basis trade. In other words, there is still much room for development in the application of basis trade in related industries.
'Promoting China's plastics industry from large to strong, not only requires the innovation and efforts of the petrochemical industry, but also the support and improvement of financial and market services. 'Zhao Jungui, vice president and secretary general of the China Petroleum and Chemical Industry Federation, is attending He said that he hopes that the petrochemical industry and the futures industry and friends in the financial sector will further strengthen exchanges and cooperation, jointly shape the price influence and international influence of the Chinese plastics market, and work hard to build a world-class Chinese plastics industry system.