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When addressing the “2015 China Plastics Industry Conference (CPIC)”, which was jointly organized by Dalian Commodity Exchange (DCE), China Petroleum and Chemical Industry Federation and China Light Industry Council in Chengdu on June 11, Wei Zhenxiang, Vice President of DCE, said that as the world's largest plastics futures market, DCE will continue to optimize and improve the systems, explore the development of options, indexes and the OTC market, and push forward the internationalization of the market by seizing the market opportunities brought by the “One Belt and One Road” strategy and taking advantage of the industrial contacts with the Middle East region.
In his speech Wei said that the three plastics futures products of LLDPE, PVC and PP currently listed on DCE roughly equates 80% of the global total consumption volume of synthetic resin. In the first five months of this year, the three products recorded a unilateral trading volume of 93.71 million contracts, or 25% of DCE’s total trading volume, a turnover of up to RMB 4.1 trillion, representing 27% of DCE’s total turnover, and an annual daily average open interest of 620,000 contracts, accounting for 13% of DCE’s daily average open interest. While taking an important position in the futures market in Dalian, the plastics futures market of DCE has developed into the world's largest plastics futures market, having a significant impact on the international plastics market.
In reviewing the development of the plastics futures market, he said that currently the development of the plastics futures market has shown the following features: first, the market has run smoothly in general and functioned well. Second, the futures and spot prices have shown high correlation, effectively reflecting the trends of the spot market. Third, the participation of the industrial clients has been on the rise, as in 2012 the number of the corporate clients participating in the plastics futures trading was 3,013, with the trading volume and the open interest accounting for 7.3% and 25% of the totals respectively, while as of May this year, the three figures were 5,571, 37.3% and 42% respectively. If the corporate units trading and holding positions with individual accounts are taken into consideration, the ratios for corporate accounts should be above 50%, and the plastics futures have been one of the sectors with relatively high-degree industrial participation in the domestic futures market.
He pointed out that in recent years DCE has seen the quality of market operation continuously improved as a result of the innovation in the systems, including revising the delivery quality standards for the LLDPE futures, carrying out the pilot for the LLDPE bonded delivery and implementing the system of registered brands for the delivery of PVC. But compared with the increasingly urgent demand of the industrial enterprises for risk management, the plastics futures market of DCE has more space for development. Therefore, DCE will continue to optimize the hedging and arbitrage systems so as to facilitate more convenient participation of industrial clients; will deepen the bonded delivery system and the delivery system of registered brands so as to perfect the operational system; will continue to develop the new products on the industry chains and vigorously explore the development of the options, indexes and the OTC market for relevant products; will continue to step up the cultivation of industrial clients and institutional investors, improve the structure of the market participants, and achieve the effective integration of the financial and industrial sectors.
Finally, he said that the state strategy of “One Belt and One Road” proposed this year has brought new opportunities for the development of the futures market. The plastic chemical products of DCE have close connection with the industries along the “One Belt and One Road” especially in the Middle East with huge space for the internationalization of related products. He also hoped that the industrial clients could further increase the hedging ratio and make better use of the plastics futures, with specialized institutions and other investors deepen their research in the plastics futures, and futures companies provide better services to investors.
