Without plaque-unveiling, gong ceremony or press conference, on the morning of February 28, the polypropylene (PP) futures contracts were listed on Dalian Commodity Exchange (DCE) with a low profile. It is the first approved new product listed on the domestic futures market in the Year of Horse, increasing the number of the petrochemical futures products listed on DCE to 3 and the number of total products listed on DCE to 15. The representatives of the petrochemical industry attending the “Forum on Listing of PP Futures and Plastics Futures Serving Real Economy” in Dalian witnessed the opening and trading of the PP futures at the trading floor of DCE.
Although keeping a low profile in the listing, the PP futures saw hot trading on the day, presenting an image of a "dark horse" in the debut. At 9 sharp that morning, after the call auction, the PP futures opened with a bilateral trade volume of 1,722 contracts on DCE, and in just one minute after the opening, the ten contracts from PP 1405 to 1502 listed that day recorded a trade volume of 10,488 contracts. On the day the PP futures contracts closed with a bilateral trade volume of 191,700 contracts and a total open interest of 38,500 contracts; the prices of the contracts reported ups and downs, with the dominant 1405 Contract closing at RMB 10,657 / ton, up by RMB 157 from the benchmark listing price, and another dominant 1409 Contract closing at RMB 10,368 / ton, down by RMB 132 from the benchmark listing price. The brisk trading and the rational price volatility of the PP contracts lived up to the market expectation. The representatives from the industry witnessing at the scene spoke highly of the performance of the PP futures, expressing high expectations for the future development.
At the trading hall on the second floor, when asked to comment on the performance of the PP futures after the listing, Zhao Zhiping, Deputy Secretary General of the China Petroleum and Chemical Industry Federation (CPCIF), said “good” several times to express his satisfaction about the trading and the market prices.
Li Nanjing, General Manager of Kingfa Sci. & Tech. Co., Ltd., Asia's largest PP consumer, said in the interview that for business entities, the biggest problem in the operation is the significant fluctuations of the plastics prices, and the difficulty in transferring the risks on the spot market. After the listing, the PP futures, serving as a good hedging instrument, will provide a platform for the enterprises to avoid risks in business. And the company will make active and good use of the instrument on the basis of the previous experience in participating in and utilizing the plastics futures.
It was also a busy and exciting day for the PP business department of Zhejiang Grand Resources Group. An official of the group said that on February 27, one day prior to the listing of the PP, the PP business department held a special meeting to discuss the changes to the market pattern and the opportunities brought by the listing of the PP futures. The company has made full preparations for the adjustments to the management system and the trade and transaction system. Having been well trained in participating in the plastics futures previously, the company will actively engage in and make use of the PP futures, and hopes that DCE could develop more petrochemical products to provide the risk control mechanism for the entire industrial chain.
Wei Yukun, General Manager of the Energy and Chemical Department of Guangzhou Futures Co., Ltd., said that the listing of the PP futures will further improve the pricing system of the petrochemical market, provide financial support for China to participate in the competition of the international petrochemical market, offer the enterprises help with better early judgment for market trends and risk management, and promote the industrial upgrading and integration, as well as improve the market-oriented level of the entire industry.
In the trading floor, a DCE official said in the interview that the listing of the PP futures, DCE’s third chemical product and sixth non-agricultural product, is of positive significance for improving the domestic petrochemical futures products system, better serving the petrochemical industry, and further promoting the development of DCE toward a comprehensive market. Currently the industrial enterprises are highly concerned about and active in participating in the PP futures, placing higher expectations for the future development of the market. In the future development and operation of the market, DCE will strengthen market supervision and service and carefully foster and maintain the product, believing that with the concerted efforts of all the market participants, the PP futures will achieve safe and stable operation and development with the functions increasingly brought into play, thus effectively serving the industry and the real economy.
