By January 6, the contracts of blockboard and fiberboard, China’s first forestry futures products, had been listed smoothly and operated successfully for one month. In the month, the “two boards” futures saw brisk trading and steady operation, with the futures prices concerned and referenced by the enterprises and the role of the market in serving the industries emerging.
According to statistics, as of January 6, 2014, in the 21 trading days since the listing and operating, the two boards futures saw the involvement of nearly 40,000 investors. The fiberboard futures contracts totaled a transaction of 2.686 million contracts (unilateral, the same below) and a turnover of RMB 98.02 billion, with the average daily trading volume and turnover at 128,000 contracts and RMB 4.67 billion, and on January 6, the open interest stood at 45,000 contracts; the blockboard futures contracts totaled a transaction of 2.263 million contracts and a turnover of RMB 147.04 billion, with the average daily trading volume and turnover at 108,000 contracts and RMB 7 billion, and on January 6, the open interest stood at 27,000 contracts. They were the two futures products with brisker performance in the same period among those newly listed in the year.
Judging from the operation of the prices, the prices of the two boards futures saw ups followed by downs with relatively stable operation on the whole. As of January 6, 2014, the dominant contracts of fb1405 and bb1405 of the two boards futures closed at RMB 66.75 / piece and RMB 120.35 / piece respectively, down by 7.4% and 4.4% respectively as against the closing prices of RMB 72 / piece and RMB 126 / piece on December 6. The first half of the listing month saw comparatively substantial fluctuations in the prices of the two boards, which showed the process of the two boards seeking the value pivotal in the context of the spot market lacking the reference prices, and the price volatility contracted relatively in the second half of the month.
Jiang Tianming, an analyst of Dayue Futures, said that the listing of the tow boards was just in the off-season of the spot market, but judging from the market operation of the futures, whether the trading volumes or open interest, an extremely brisk performance was seen. As the futures products are the first on the forestry industry chain, such market participation was commendable at the early stage of the listing.
Regarding the price changes of the two boards after the listing, Jiang said that in the early period of the listing, the seasonal tight supply of raw materials supported the prices of the two boards. In addition, the ex-factory price of formaldehyde, an important raw material for glue, climbed higher and higher in December. Despite the expectation for the off-season of the demand for the two boards in housing decoration, boosted by the cost factors, the prices of the two boards still went up steadily. With regard to the recent price changes, Lin Feng, analyst of GF Futures, and Huang Shanghai, researcher of Changjiang Futures, believed that the recent drops of the two boards futures prices have mainly resulted from the factors such as the weakening seasonal demands and the funds going short. Considering the economic operation at a low level and the declining prosperity of the downstream industries in the future, the mid and long-term trend of the two boards futures is hardly optimistic, but in the short term, with the driving force for the “two boards” to go short depleted recently as well as the demands in decoration, which will be under the effect of construction rush before and after the Spring Festival, likely to pick up slightly, the prices may rebound before the Spring Festival.
Jiang pointed out that from the perspective of the current price changes of the two boards futures on Dalian Commodity Exchange (DCE), with higher participation of the spot enterprises, the participation of hedgers and arbitragers have effectively stabilized the previous significant fluctuations of the two boards and the spot and futures prices have gradually interacted. Therefore, the spot enterprises with larger sizes have paid attention to and referenced the futures prices. The two boards futures have provided the spot enterprises with an instrument for price discovery, giving the upstream and downstream enterprises of the blockboard and fiberboard the access to hedging through the futures instruments. The spot enterprises can improve the ability of fending off the industrial risks, and in an unstable market, take the initiative to make plans and organize production and operation as well as avoid risks through hedging and lock the costs and profits.
Market participants pointed out that 15 years ago the domestic blockboard futures were delisted because of the frequent events of market risks. 15 years later, the blockboard futures have been successfully listed and operated steadily. The reasons are that on the one hand, after ten-plus years of development, China’s blockboard market has formed solid foundation of spot goods supporting the development and operation of the futures market, and DCE has adequately chosen the core-board with large domestic productions as the traded object, which is substantially different from the futures traded object of the imported tri-ply wood previously; on the other hand, after more than two decades of standardization and development, China’s futures market has formed the well-developed regulatory system of “five functions in one” and the effective market risks prevention and control system, and can timely and effectively prevent and control market risks, representing substantial improvement in market development as against years ago. In addition, we also note that since the listing of the fiberboard and blockboard futures, DCE has paid close attention to the conditions of relevant spot markets and fulfilled the supervisory and service responsibilities in trading, settlement, delivery, inspection and other important processes, thus ensuring the steady operation of the two boards futures.
