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Glycol futures listed on the market for one year have become the current benchmark price, providing better liquidity for the futures market

来源: 证券日报 2019-12-11 10: 53: 03Source: Securities Daily

On December 10, 2018, the market-focused ethylene glycol futures landed on the Dalian Commodity Exchange. In the past year after listing, the overall operation has been stable, positions have steadily increased, transactions have become more active, and industrial capital participation has been relatively high, which has provided better liquidity for the futures market. Glycol futures submitted a satisfactory annual "response".

"Securities Daily" reporter learned that in this year, the proportion of hedging companies using futures tools has been increasing, the methods are diverse and flexible, the futures price discovery, hedging functions have been well exerted, ethylene glycol futures prices It has also become the "benchmark" of spot prices, and spot trading based on futures prices is gradually becoming the mainstream of the market.

Satisfied with "transcript" in the first year of listing

On December 10, 2018, ethylene glycol futures "appeared" at the Dashang Exchange. As a large domestic polyester manufacturer, Ningbo Hengyi Industrial Co., Ltd. participated in the first-day trading of ethylene glycol futures. Recalling the scene at the time, Mo Jianjian, deputy general manager of Ningbo Hengyi Industrial Co., still remembers it. "In just 3 months, the spot price of ethylene glycol has fallen by 26%. The short-term sharp fluctuations in raw material prices have brought great difficulties to business management." Mo Jianjian said that in this context, ethylene glycol futures are just the same. Going public at this time brings a "gospel" to the company.

"Polyester companies can not only avoid price risks by hedging, but also obtain future market supply and demand information through the futures market, and improve the scientific and rationality of corporate production and operation decisions." Mo Jianjian said that during the initial stage of the listing of ethylene glycol futures Ningbo Hengyi launched futures trading and participated in the delivery of the first ethylene glycol contract, the 1906 contract, which delivered a total of 146,600 tons. Today, glycol futures have been listed for a full year. Regarding the performance in the first year of listing, Mo Jianjian admitted that the ethylene glycol futures submitted a heavy "response".

The reporter learned that the spot price trend of ethylene glycol futures has been highly consistent over the past year, the overall operation is stable, positions have risen steadily, transactions have become increasingly active, and the current linkage is strong. From the perspective of closed positions, the scale continues to grow.

According to the reporter's understanding, the number of corporate customers involved in ethylene glycol futures trading has reached more than 4,600, and nearly half of the average daily positions are held by legal persons. At the same time, the futures spot convergence is strong. As of December 10, the correlation between the futures price of the main ethylene glycol contract and the spot price reached 0.96, and the average basis difference was -22 yuan / ton, and the futures price discovery function was well reflected.

According to industry insiders, spot price fluctuations before the listing of ethylene glycol futures were frequent and irrational, and physical companies often had headaches. After the listing of ethylene glycol futures, with the rich and diversified market participants, the price trend is closer to changes in supply and demand, and irrational excessive fluctuations in the past have been significantly reduced.

The listing of ethylene glycol futures not only makes price fluctuations more rational, but also has a profound impact on the market, which is specifically reflected in changes in spot participants and changes in spot trade patterns. The reporter learned that due to the relatively low threshold of spot trade, the ethylene glycol trade circle has had mixed results for a long time, which lacks fairness for spot participants operating in good faith. "With the listing of ethylene glycol futures, investment companies with good credit standing, risk management subsidiaries of futures companies, and state-owned enterprises with stricter risk control have entered the spot market, which has increased the integrity of the ethylene glycol trading circle to a certain extent. It gives spot participants more choices of reliable partners. "Said Hao Daqing, head of Zhongli Chemicals Business Unit.

Futures prices are open, continuous and transparent. At the beginning of the listing of ethylene glycol futures, the basis spread price came into being. "Through the basis spread, futures arbitrageurs and traditional traders as well as downstream factories each take what they need." Hao Daqing said.

In the opinion of Huatai Futures analyst Yu Yongjun, the ethylene glycol futures market has shown mature and stable characteristics in just one year. "This is inseparable from the design of contract rules that meet the actual needs of the market. It also benefits from the characteristics of the ethylene glycol participating groups. Most companies have a deep understanding of futures tools and rich experience in futures trading."

Rich and diverse market participants

The futures market provides better liquidity for spot market hedging, which is also reflected in glycol futures. "Since the listing of ethylene glycol futures, the market participation has been very high, the transaction volume is large, and the price continuity is also good, which is very convenient for hedging." Said Yong Lei, manager of Zhangjiagang Yangzijiang Bonded Trade Department of Commerce.

Because of this, after the listing of ethylene glycol futures, downstream factories, midstream trading companies, and asset management private equity institutions have joined in. Some upstream factories have also begun to pay close attention to or increase the use of ethylene glycol futures tools.

As a physical enterprise, what Mo Jianjian feels most deeply is that the futures market provides better liquidity for hedging in the spot market, which facilitates rapid hedging of physical enterprises in large price fluctuations. From the perspective of market participants, polyester factories have made better use of the futures hedging function this year. Especially when the finished products are slow-selling and the inventory pressure is increasing, companies can throw raw material futures to maintain the value; the finished products are sold well and the inventory is oversold. At this time, he bought futures for hedging and optimized the inventory management tools.

"Combining our experience of participating in the past year, we can incorporate glycol futures into the industrial chain to operate. The company and downstream factories have signed annual contracts for the supply of ethylene glycol, which need to be guaranteed for spot production for polyester factories every month. However, this year's polyester environment is relatively pessimistic, and there has always been a risk of spot depreciation. Using futures tools, the purchase of foreign currency USD goods is declared to the factory, and the futures contract is sold on the day of buying the spot to maintain the value, avoiding price decline The risk of depreciation. "Wang Shuru, a person in charge of Ningbo Zhongji Group said.

Similarly, for production companies, ethylene glycol futures also bring certain hedging opportunities after listing. Guotai Junan Futures analyst Ye Weile said that in December 2018, when the glycol price was at a high level of 5,700 yuan / ton, the glycol factory judged that the stocks of ports in the market would accumulate significantly, and the price would reach the cost side. There is a lot of room for price decline, and it may last until the end of the inspection season for glycol in June 2019. "Ethylene glycol plants need to sell hedging for the production of ethylene glycol in the next 6 months." Ye Weile said that the plant will start selling corresponding hedging in the futures market from December 2018. Once a product is signed and a sales contract is signed, the corresponding position is closed in the futures market. Until the price of ethylene glycol fell to around RMB 4,500 / ton in June, the factory closed all positions, effectively avoiding price risks. (Reporter Wang Ning)

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