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On April 20, sponsored by China Petroleum and Chemical Industry Federation (CPCIF), the 2017 Petrochemical Industry Development Conference was held in Dalian. At the conference, Jiang Wei, director of industrial development department of Dalian Commodity Exchange (DCE), said that in recent years DCE has continued to advance the OTC option business, the basis pricing model and a number of innovative delivery systems. ,Market training has been strengthened. Petrochemical clients get access to a full range of hedging tools and are of increasing interest to participate in the futures, having pushed forward the win-win development in the futures market and the petrochemical industry.
According to the sources, in recent years the increasingly improved functioning of the domestic futures market has laid a solid foundation for better supporting the petrochemical industry. Currently a total of 16 futures products in the three sectors of agricultural products, chemicals and energy and minerals have been listed and traded on DCE. With a trading volume of 1.537 billion contracts (single-sided, the same below) and a turnover of RMB 61.41 trillion in 2016, DCE has developed into the world’s largest futures market for oils, plastics, coal and iron ore and the second largest for agricultural products. Specifically, DCE has listed the chemical futures of LLDPE, PP and PVC, with the trading volumes reaching 1.0093 trillion, 1.2377 trillion and 112.4 billion contracts respectively in 2016, the numbers of the clients participating in the futures trading increasing by 4%, 23% and 217% respectively year on year, and the total number of the clients registering a high growth.
In terms of the futures market function, the futures-spot correlation rates of the above-mentioned chemical futures products stood at 0.85, 0.97 and 0.94 respectively in 2016, showing fair correlation between the futures and spot prices. On the other hand, the average daily turnover rates remained at high levels. For example, the LLDPE futures posted an average daily turnover rate of 122% in 2016, indicating the stable and sufficient liquidity in the market. The clients averted the risks by using futures market, and the difficulties in risk management and management costs for the enterprises are effectively reduced. With regard to the above-mentioned three chemical futures products, the average daily proportions of the open interest held by corporate clients were more than 40% in 2015 and 2016. Specifically, the open interest of PVC futures held by the corporate clients accounted for nearly 60% of the total on an average daily basis, demonstrating that the chemical futures have been recognized by more and more enterprises in the industry.
