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Recently, Dalian Commodity Exchange (DCE) held a discussion meeting on the contract rules of the fiberboard and plywood futures in Guangzhou. The representatives from the China National Forest Product Industry Association, the industrial enterprises such as Zhejiang Shenghua Yunfeng, Daya Technology and Dehua Group, the delivery warehouses, the quality inspection institutions and the DCE member units compared in-depth notes on the contracts and the draft rules of the futures of the two boards, providing their opinions and suggestions on further improving the contracts and rules.
At the meeting, a DCE official described in detail the guidelines for designing the contract rules of the fiberboard and plywood futures, the recent solicitation of opinions and suggestions, and the DCE’s revisions to the relevant systems on the basis of the opinions and suggestions from the market. The official said that promoting the listing of the two boards is the efforts made by DCE to implement the CPC Central Committee’s No. 1 Document of 2012 on “Strengthening the building of the futures market of agricultural products and adding new futures products of bulk agricultural commodities at appropriate time”. To achieve the success in the two futures products, the DCE researchers have designed the contracts and rules after conducting thorough survey and research in the spot markets by visiting nearly 100 enterprises in the main domestic production and sales areas of artificial boards such as Yangtze River Delta, Pearl River Delta and the Bohai Sea Rim and organizing four discussion meetings successively since 2012.
According to the official, the traded objects of DCE’s futures of “Two Boards” are block board and medium density fiberboard, which are totally different from the tri-ply wood of the imported plywood listed in relevant domestic exchanges in the 1990s. The main contents of the futures contracts and rules of the two boards are: the trading unit is 500 sheets / contracts, the unit of quoted price is yuan (RMB) / sheet and the minimum price change is RMB 0.05 / sheet. The contract specifications are calculated on the basis of the margin ratio of 5% for DCE and 8% for futures companies and the trading thresholds for the fiberboard and plywood are above RMB 3,000 and RMB 4,800, at the same level of the current soybean meal and coking coal products. The minimum delivery unit is the same as the trading unit, and to reduce the delivery costs, the inspection lot group is 3,000 sheets with the sampling and charging also applied to the group below 3,000 sheets. In response to the market participants’ calling for further reducing the delivery costs, DCE has lowered the expenses in each process, significantly cutting down the delivery costs of the futures products of the two boards in comparison with other products, among which, the preparatory deposit is only at the level of 75% of other products, the delivery handling charge is at the level of one third of other products and the storage charges and the charges for out-put and in-put of warehouse are also reduced as low as possible.
The attendees to the meeting spoke highly of DCE’s contracts and rules of futures products of fiberboard and plywood. An official of China National Forest Product Industry Association said that the listing of the futures of the two boards is of great significance for spot enterprises, and will effectively lower the enterprises’ financial risks, stabilize the prices of the products and reduce disorderly competition on the market. As the fiercest competition for the spot enterprises occur in the sales process currently, the stable profit expectations will further help the enterprises focus on the normal production and operation and improve the market competitiveness. He also suggested that DCE start from the two boards to develop more new products of forestry products and provide more risk management instruments for the production and operation of the enterprises.
An official of Daya Technology Asset Management Co., Ltd. said that the listing of the futures of the two boards will provide the spot enterprises with a platform for using the financial market for hedging trade in relevant products and achieving the purposes in two ways as well as reducing and stabilizing the enterprises’ operating costs. He expected the futures of the two boards to be listed as soon as possible so as to improve the international status of the nation's artificial board industry.
The experts present at the meeting also compared notes in detail on such issues as improving the setting of the standard products, the details of the quality inspection operations and the delivery sites. Some industrial representatives proposed that after the listing, DCE could constantly organize the training for the industry, so that the relevant industrial enterprises could gain in-depth understanding of the contracts and rules for the futures of fiberboard and plywood and better participate in and make use of the market.
A DCE official said at the meeting that DCE has achieved great success in the innovation of the new products. The futures products of coking coal, iron ore and egg listed this year are all of innovative significance: the coking coal contract is China’s first coal futures product, the “China-version” iron ore contract is the world’s first iron ore futures product featuring physical delivery, and the egg contract is China’s first futures product of livestock and fresh agricultural product. The listing of the contracts of fiberboard and plywood will also open up the new field of the futures market serving the forest industry, and is of great importance for both China’s futures market and the forestry industry. In the future, DCE will continue the effective efforts in the innovation, development and improvement of the market and better facilitate the development of the relevant industries and the real economy.
