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China’s first wood futures contracts appear and the trading and delivery object is the medium-density fireboard and core-board.
In order to listen to the opinions and suggestions of all market participants, further improve the relevant rules and operation mechanism of the fireboard and plywood futures (hereafter referred to as “two boards futures) contracts, and ensure the successful launch of the two boards futures contracts and bring into full play of their role in the future, the Dalian Commodity Exchange (DCE) released a notice on October 21 to publicly solicit opinions on fireboard and plywood contracts and relevant rules from all market participants. As China’s first futures varieties in the woods field, the two boards contracts officially appeared.
Market opinions and suggestions will be solicited publicly on the exposure drafts of the “Fireboard Futures Contract of DCE”, the “Plywood Futures Contract of DCE”, the “Amendments to the Trading Rules of DCE”, the “Amendments to the Delivery Rules of DCE”, the “Amendments to the Risk Management Measures of DCE”, the “Amendments to Designated Delivery Warehouse Management Measures of DCE”, and the “Amendments to the Standard Warehouse Receipt Management Measures of No. 1 Soybean, No. 2 Soybean, Corn, Linear Low Density Polyethylene, Polyvinyl Chloride, Fireboard, and Plywood of DCE” before November 1, 2013.
According to the contract content and the amendments to the trading rules and delivery rules released by DCE, the trading unit of the two boards contracts is 500 pieces per lot, the minimum price change is RMB 0.05 per piece, the contract trading limit is 4% of the settlement of the previous trading day, the minimum margin is 5% of the contract value, the trading months range from January to December, the last trading day and the delivery day are the tenth trading day of the contract month and the third trading day after the last trading day respectively, and the delivery manner is physical delivery. The maximum volume of the two boards futures contracts trading order made each time is 1,000 lots and the delivery unit is 500 pieces.
According to the released basic delivery products standards, the design of DCE’s two boards is totally different from the tri-ply wood of the import plywood listed in the related exchange in 1990s. The trading delivery object is the medium-density fireboard and the core-board. The basic delivery products standards of the two boards released in the opinion-soliciting draft are as follows: the basic fireboard delivery product is the 15mm-thick medium-density fireboard for furniture use (length and width: 2.44m*1.22m) and the 18mm-thick medium-density fireboard for furniture use (length and width: 2.44m*1.22m) can be used for delivery; the basic plywood delivery product is the 15mm-thick core-board (length and width: 2.44m*1.22m) and the 18mm-thick core-board (length and width: 2.44m*1.22m) can be used for delivery. The standard products have been designed according to the fireboard and plywood with the largest market scale. Proceeding from the characteristics of the wood products, the standard level of formaldehyde emission limit of the “two boards” is set to conforming to the E1 level of the compulsory national standard and relatively large discount has been set to the lower E2 level.
In terms of the margin system design, two gradient charges will be applied on the two boards varieties that are close to the delivery month: before the tenth trading day in the month before the delivery month, the contract margin will maintain the same as in the ordinary months, that is, 5% of the contract value; from the tenth trading day in the month before the delivery month to the last day before the first trading day in the delivery month, the contract margin is 10% of the contract value; and contract margin in the delivery month is 20% of the contract value.
With regard to position-holding management, when the total bilateral position-holding amount in the fireboard month is less than or equal to 500,000 lots, the martin is 5% of the contract value; and when it is above 500,000 lots, the margin is 7%. When the total bilateral position-holding amount in the plywood month is less than or equal to 160,000 lots, the martin is 5% of the contract value; and when it is above 160,000 lots, the margin is 7%. The basic amount of position-holding limit of fireboard futures companies is set as 160,000 lots and the position-holding limit ratio is set as 25%; and the basic amount of position-holding limit of plywood futures companies is set as 60,000 lots and the position-holding limit ratio is set as 25%. The position-holding limit of fireboard contract of non-futures company members and clients in ordinary months is 16,000 lots (10% of the single-sided position-holding if exceeding the basic amount of position-holding limit), the position-holding limit of non-futures company members and clients from the tenth trading day in the month before the delivery month to the last day before the first trading day in the delivery month is 400 lots, and that in the delivery month is 100 lots. The position-holding limit of plywood contract of non-futures company members and clients in ordinary months is 6,000 lots (10% of the single-sided position-holding if exceeding the basic amount of position-holding limit), the position-holding limit of non-futures company members and clients from the tenth trading day in the month before the delivery month to the last day before the first trading day in the delivery month is 80 lots, and that in the delivery month is 20 lots.
According to the exposure draft of Amendments to the Standard Warehouse Receipt Management Measures, to apply for registration of standard warehouse receipt of fireboard and plywood, the application date should be within 60 natural days (60 days included) of the date of manufacture of the product and the standard warehouse receipt can be cancelled on the last working day in March, July, November of each year.
Relevant person in charge of DCE said that China is a large production and selling country of fireboard and plywood, with its total output and export volume both ranking the first in the world, which has shown its prominent position in the global industry. The listing of the two boards futures can provide spot enterprises with risk management tools and promote the steady and healthy development of relevant industries in China. Meanwhile, it will also help to standardize and lead the industry development and increase the risk resistance capacity and the competitiveness of advantageous enterprises with the efficient price-finding and information-passing functions of the futures market, so as to effectively coordinate with relevant industry policies and assist the upgrading of China’s fireboard and plywood industries. In recent years, in order to further expand the space of futures market for serving the industry and the real economy, DCE has gone deep into the wood industry and carried out research and demonstration on the two boards varieties for years. And it has finished the design of the draft of the two boards futures contracts after fully listening to the opinions and suggestions of all market participants. DCE hopes to further improve the contracts and relevant rules by publicly soliciting opinions of all market participants, thus making sure the successful listing and steady operation of the contracts in the future and the display of the market function, so as to better serve the spot enterprises and the industrial development.
It is learnt that the two boards industry links to the wood and chemical raw materials in the upstream of its industry chain and relates to the furniture, ornament, packing, and automobile manufacturing industries in the downstream of its industry chain, which has made it a key variety in the wood industry. According to the statistics of the Food and Agriculture Organization (FAO) of the United Nations, China’s fireboard output in 2012 accounts for about 53.4% of the total output in the world and its export volume takes up about 13.9% of the total global trading volume; and China’s plywood output is about 51.8% of the total in the world and its export volume is about 37.1% of the total trading volume in the world.
