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The polypropylene (PP) futures will be listed and traded on Dalian Commodity Exchange (DCE) on February 28. On February 27, DCE announced that the benchmark listing price of all the first listed contracts of PP futures, including PP1405, PP1406, PP1407, PP1408, PP1409, PP1410, PP1411, PP1412, PP1501 and PP1502, is RMB 10,500 / ton.
As the benchmark price is RMB 10,500 / ton, the minimum trade margin for DCE is 5% of the contract value, the futures companies generally charge clients an extra 3-5% of the contract value in addition to the margin for DCE and the total margin ratio is about 10%, at least RMB 5,250 is needed for transaction of each contract.
Market participants believed that the currently announced benchmark price is slightly lower than the spot prices, but considering that the prices of futures contracts are the future prices and the prices are under significant downward pressure for the future from the perspective of the economic trend, the current benchmark price is reasonable.
