Polypropylene (PP) futures, the first futures product in the Year of Horse, have been listed for one month by March 27. In the month, the PP contracts have seen relatively brisk trading, active participation of industrial clients, close ties between the futures and spot prices and stable market operation on the whole, with the economic functions brought into play on the market.
According to statistics, in a total of 20 trading days from February 28 to March 27, the PP futures have attained a total trading volume of 1.3686 million contracts (bilateral, the same below) and a transaction sum of RMB 69.944 billion, with an average daily trading volume of 68,400 contracts. With regard to the positions, the PP futures have maintained stable open interest in general, with an average daily open interest of 67,500 contracts as well as an open interest of 72,700 contracts at the closing on March 27. It has performed well in the trading among the newly listed products.
Since the listing, along with market development, the market influence of the PP futures has been gradually improved with the numbers of the clients and corporate clients participating in the trading steadily increased, and the trading volume and open interest of the corporate clients accounted for 12.64% and 34.22% of the total respectively, close to the levels of the participation of the corporate clients on the whole market of Dalian Commodity Exchange (DCE). With respect to the participation of the corporate clients, currently all the sectors on the industrial chain have seen the participation of the enterprises in the trading of the PP futures, with traders showing the most active involvement.
In the opinion of market participants, in the first month of the listing, the PP futures saw steady operation of the prices, with the dominant 1409 Contract closing at RMB 10,492 / ton on March 27, up by 1.2% as against the price of RMB 10,368 / ton on the first listing day; the futures and spot prices have shown high correlation with the role of the futures market in guiding the prices initially demonstrated, and the contract and system designing of the PP futures has been basically recognized by the market. Wu Heng, an analyst with Galaxy Futures, said, “The PP futures prices have shown roughly consistent trends with the spot prices, presenting relatively high correlation with the spot prices of the mainstream PP products in East China. All the PP futures contracts have the same benchmark listing price, and after one month of operation, the back-month discount structure has been basically formed. The contracts of PP1405, PP1409 and PP1501 closed at RMB 10,977 / ton, RMB 10,492 / ton, and RMB 10,153 respectively on March 27, reflecting the general market trends of the demand slowdown of the downstream plastic products industry in the future and the increasing supply of the raw materials of synthetic resin.
A DCE official said that to effectively foster the PP futures, before and after the listing of the product, DCE has organized dozens of intensive training sessions, laying a solid foundation for the industrial clients to actively participate in the market after the listing of the PP futures. In the future DCE will prioritize the cooperation with industry organizations and futures companies, and according to the structure of the spot market participants, provide the targeted or "one to one" market services and training for the enterprises, in a bid to guide the enterprises in scientifically making use of the market and promote the functioning of the PP futures market in full.
It is learnt that the PP futures listed on Dubai Gold and Commodities Exchange almost at the same time recorded a trading volume of 4,296 contracts in the first listing month, and on March 27, the bilateral open interest stood at 226 contracts, with all the trading concentrated on the contract of 1407 and the closing settlement price at US$ 1,435 / ton.