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Dalian Commodity Exchange (DCE) held the “2018 Review Meeting on Basis Trading Pilot Programs” in Dalian on December 19, which approved the 10 programs submitted by 9 futures companies. The 10 programs involved 5 products including iron ore, coking coal, PP, PVC and PE. They were divided into 2 groups, the black group and the chemical group (each with 5 programs), and ranked respectively in each group. As a result, 2 iron ore programs of Guosen Futures ranked No. 1 and No. 2 in the black group, and the PE program of Guotai Jun’an Futures and the PVC program of Huaxi Futures ranked among the top 2 in the chemical group.
New breakthrough has been realized in coking coal in the basis trading pilot program this year. Judging from the participating enterprises, the 10 pilot programs were all conducted between entity enterprises and trading companies, including leading state-owned enterprises like China National Petroleum Corporation, HBIS Group, Shanghai Secco (a wholly-owned subsidiary of Sinopec) and Yibin Tianyuan Group, representative private enterprises such as Oriental Energy and Shaoxing Sanjing, and large transnational corporations like Cargill, thus having significant influence and demonstration effect.
Relevant heads of Secco, Tianyuan Group and Ansteel fully affirmed the good performance of relevant futures products in price discovery and liquidity, which offered effective underlying and foundation for basis trading. They also recognized the platform and support provided by DCE for basis trading of enterprises along the industry chain. A program representative said that basis trading would help to streamline the up, middle and down streams in the whole industry chain, determine forward prices, lock up downstream orders and resolve the potential risk of “buying at a higher price and selling at a lower one”, thus realizing the seamless connection of product application, logistics and goods receipt and payment. In the future, DCE will continue to improve the continuity of contract, the stability of trading underlying and the completeness of derivatives instruments, intensify industry services and keep exploring new ways of relevant futures products serving the relevant industries and the real economy.
