At the “2014 China Plastics Industry Conference (CPIC)” held in Hangzhou on May 27, Liu Xingqiang, Party chief and chairman of Dalian Commodity Exchange (DCE), said that at the new stage of deepening the reform in an all-round manner, China’s futures market will also meet with new opportunities for development. Under the correct leadership of the China Securities Regulatory Commission (CSRC), DCE will adhere to the market, legal and international orientations, strive to improve the market efficiency and further promote the functioning of the futures market.
In the first place, Liu briefed the conference on DCE’s efforts in developing the plastic futures. He said that since 2007, three of the five major synthetic resins have been listed on DCE, and the futures market in Dalian has developed into the world's largest plastic futures market, providing the relevant industries with relatively complete risk management instruments. From January to April this year, the total trading volume of the three plastic futures products amounted to 20 million contracts, accounting for 8.69% of DCE’s total trading volume. Specifically, as of the end of 2013, the LLDPE, the first plastic futures product listed on DCE that is also the most grown and representative, had totaled a trading volume of 360 million tons and a turnover of RMB 18.74 trillion, equivalent to approximately 1.8 billion tons of spot goods; in 2013, the average daily trading volume stood at 303,000 contracts and the daily trading size reached more than one million tons.
When talking about the plastic futures market serving the real economy, Liu said that over the years, DCE has always adhered to the fundamental orientation of the futures market serving the real economy, having achieved effective results. Attracting widespread attention from the market participants, the prices of DCE’s plastic futures products have become important references for the production and operation of the enterprises, and some major international petrochemical enterprises have also paid attention to and referred to the plastic futures prices. By making effective use of DCE’s plastic futures market, many domestic enterprises have greatly improved the level of operation and management. From January to April, a total of 1,652 corporate clients participated in the trading of the plastic futures on DCE, and in a short listing period of three months, the PP saw more than 600 corporate clients participate in the trading. It can be said that DCE’s plastic futures market is of great significance for the healthy development of China’s entire plastics industry.
He pointed out that the 3rd Plenum of the 18th CPC Central Committee proposes to make the market play a decisive role in allocating resources, and the new “National Nine Opinions” recently issued by the State Council has made it clear to expand the futures market and put forward higher requirements for the futures market serving the national economy. At the new stage of deepening the reform in an all-round manner, China’s futures market will also meet with new opportunities for development. In the construction and development of the petrochemical and other futures markets, DCE will focus on the following tasks: first, we will step up the products innovation, continue to seek new breakthroughs in the petrochemical sector and provide the petrochemical industry with more risk management instruments; second, we will vigorously tap into the new markets, explore the new ways of futures-spot integration, and develop the options, indexes and other new trading instruments; third, we will refine the listed products, promote the smooth implementation of the LLDPE bonded delivery, and actively carry out the pilots for the delivery registered brand system of the PVC futures product; fourth, we will better serve all kinds of investors, respect the market rules, optimize hedging and arbitrage rules, reduce trading costs and improve the operation efficiency of the market.
The experts from different fields also briefed the conference on the macro economy and the status of the petrochemical and light industries. Zhao Jungui, vice president of China Petroleum and Chemical Industry Federation (CPCIF), said that at present, China is facing the increased downward pressure on the economy. From January to March, the petroleum and chemical industry realized a total profit of RMB 196.94 billion, an increase of 2.1% compared to the same period last year, a significant decrease of 8.5 percentage points from the figure of the same period of last year; the petroleum and chemical industry saw the decrease of the general level of prices expanded further, falling by 2.6% in total. The petrochemical industry is in the face of arduous tasks of transformation and upgrading, with the previous high-speed growth unlikely to show again.
He said that the 3rd Plenary Session of the 18th CPC Central Committee clearly pointed out that the core of the reform of China's economic system is to make the market play a decisive role in allocating resources, and we should give full play to the functioning of the market and promote the transformation and upgrading of the petrochemical industry. Overall, China's petroleum and chemical industry has entered a new stage of development mainly characterized by restructuring, transformation and upgrading and the market-oriented reforms. From the perspective of future development, China is in the development process of industrialization, urbanization and agricultural modernization, and the petrochemical industry, the pillar industry of basic raw materials and energy, still has much room for development and huge market potential.
Cai Daying, deputy secretary-general of China National Light Industry Council (CNLIC), said that after the leapfrog development in 2010 and 2011 and the significant downturn in 2012, various intertwined factors have pushed up the costs more rapidly and weighed heavily on the plastics industry, including the overcapacity at the stage, insufficient investment in technology, the decreasing innovative capability and inadequate structure, etc. Since the first quarter of this year, the downward trend has been initiated, declaring the end to the stage of high-speed development. But there are still favorable factors as the construction of the new rural areas will drive up the demands for plastics, the industrial investment is still in full swing and the industries in the Midwest areas have been further balanced, which will benefit the follow-up development of the industries. In addition, the U.S. and European economy has seen some recovery, which provides favorable guarantee for the further expansion on the international market. The potential positive factors reflect the policy guideline with the restructuring as the main line, making the market full of confidence in the trend of the plastics this year.
Since 2008, DCE, CPCIF and CNLIC have successfully organized six sessions of CPIC. The theme in 2014 centers around “The plastic futures serve the industries in the background of economic growth slowdown.” Under the new situation of global macroeconomic development and the development of domestic and foreign petrochemical market, the theme has aroused great attention and active participation of the industrial circle and the futures industry. During the one-day session, the experts at home and abroad delivered special reports on various topics such as the macro-economic situation, global energy price trends, the evolution of the plastic industry pattern and the operation of the futures, the outlook of the Middle East chemical market and how the futures innovative businesses serve the plastic midstream and downstream enterprises. The conference also included two special forums on the prospects of the plastic market development and the futures innovation and risk management. Attending the conference were the representatives of 200-plus units including the government departments, the industry organizations, the relevant enterprises and futures companies.