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The “2018 National Petroleum and Chemical Industry Economic Situation Analysis Meeting – China Petroleum and Chemical Industry Economy Forum” was held in Daqing City, Heilongjiang Province on August 2. About 400 persons from relevant national ministries and commissions, China Petroleum and Chemical Industry Federation (CPCIF) and petrochemical enterprises across the country attended the meeting.
DCE Vice President Zhu Lihong said in her speech that serving the real economy is the fundamental purpose of the futures market. After 20 years of development, DCE has initially set up a multi-level risk-avoiding system with mutual-complement futures and options, mutual-exchange floor trading and OTC (over-the-counter) trading, and interconnected domestic and overseas markets, and thus been equipped with the basic conditions for serving the risk management of enterprises. In the chemical industry, DCE has formed the plastics futures products system. It has listed LLDPE, PVC, PP futures products one after another since 2007 and has developed into the largest plastics futures market in the world over 10 years of development, which has provided petrochemical enterprises with relatively sophisticated risk management tools.
Zhu Lihong said that the price-finding function of Dalian plastics futures has been full displayed. First, the relevance between spot and futures prices of these three plastics products has maintained at 90% and above in 2017. The basis pricing mode based on DCE plastics futures price has become an important trading method in domestic plastics trading and over 40% of the plastics spot trading has hedged through futures market. Second, the market operation efficiency has kept increasing. In recent years, DCE has actively adapted to the changes in industrial pattern, optimized the delivery registered brand system and the delivery warehouse distribution, and promoted the in-depth integration between futures and spot markets. As a result, more and more entity companies have conducted risk management via the futures market. In 2017, nearly 1,200 spot enterprises have taken part in DCE plastics products trading and the trading volume and open interest of corporate clients accounted for 24% and 48% respectively, gradually becoming the main force in the futures market. Third, the industrial service capacity has kept enhancing. In 2017, DCE carried out 7 pilot OTC options programs in plastics products, issued 9 chemical-related commodity price indexes, and conducted commodity swaps successfully, which have provided petrochemical enterprises with more flexible, accurate and individualized risk management services. Fourth, DCE has offered training to accumulated 15,000 person-times from petrochemical enterprises in 2017 through the Futures Institute, EDP training program, Industry Base and other service brands, which has laid a foundation for market development and service.
She said that the petrochemical industry is the pillar industry in national economy and its sound development is closely related to the stable operation of the national macro economy. To better serve the development of the petrochemical industry, DCE will continue to deepen the cooperation with the CPCIF and the whole industry, launch new futures products like glycol and styrene as soon as possible, accelerate the listing of options contracts of plastics and other products, and keep enriching the products system of the petrochemical industry chain. Besides, DCE will strengthen the OTC market construction, expand the pilot of OTC options and basis trading, research the opening-up of plastics and other products, and keep enhancing its position in the international market.
It is learnt that this conference is organized by the CPCIF and co-organized by China National Petroleum Corporation, Sinopec Group, China National Offshore Oil Corporation, Sinochem Group, Shanghai Futures Exchange and DCE. At the conference, CPCIF Vice President Fu Xiangsheng introduced that the main income margin of the petrochemical industry in China reached 7.56% in the first half of this year, up by 1.72 percentage points compared with the same period of last year and marking the largest growth over the past 7 years. Though the whole industry has been great on the whole in the first half year, the problem of over capacity has maintained, the structural contradictions have still been prominent, and the resources constraint has become increasingly severe, thus posing many challenges to the high-quality development of the whole industry. Jiang Yuan, Deputy Chief of the Industrial Statistics Department of the National Bureau of Statistics, said that the present industry margin mainly comes from the upstream energy and raw materials industry and it will drop once the price upward trend stops.
With regard to this idea, the guests believed that greater transformation and upgrading efforts should be made in the industry in the next half year and the risk management level should be enhanced by making use of the futures market. Relevant chief of the DCE Industrial Products Department said that DCE is now researching to promote the optimization of the contract system, such as launching delivery brand registered system, piloting the exemption system on trading companies and the warehouse receipt service provider system and adding delivery areas, which will bring convenience for industrial enterprises to take part in futures hedging and help them avoid risks and enhance efficiency.
