To better leverage the functions of the futures market, support export pricing by petrochemical enterprises, and enhance the international influence of commodity prices, Dalian Commodity Exchange (“DCE”) has decided to launch a pilot program for export pricing with selected petrochemical futures. The relevant matters are hereby notified as follows:
I. Overall Arrangements
(I) Pilot Products
Polypropylene (PP), Linear Low Density Polyethylene (LLDPE), and Polyvinyl Chloride (PVC).
(II) Pilot Enterprises
Category I Enterprises: DCE Industry-Finance Integration Cultivation Bases, factory warehouses for the pilot products, and futures risk management subsidiaries.
Category II Enterprises: Other industrial enterprises related to the pilot products.
Pilot enterprises shall meet all of the following requirements:
1. Have independent import and export rights and, during the preceding 12 months, have exported at least 1,000 metric tons of a single pilot product on a self-operated basis;
2. Have at least one year of experience in trading the relevant futures product, or possess other mature capabilities in the operation of futures and other derivatives;
3. Have not committed any material violations of laws or regulations in the areas of customs, taxation, or futures regulation during the preceding three years.
(III) Applicant
The headquarters of a futures company.
(IV) Pilot Scope
Pilot Model: In export transactions, pilot enterprises may use the futures prices of the corresponding pilot products, including PP Futures, LLDPE Futures, PVC Futures, PP MAF Futures, LLDPE MAF Futures, and PVC MAF Futures, as a pricing benchmark or a benchmark for margin top-up, so as to promote the application of basis pricing in export transactions.
Requirements:
1. For projects using futures prices as a pricing benchmark, the futures pricing weight shall be no less than 20%. For basis pricing arrangements, the relevant provisions of the export contract shall specify key terms, including the benchmark futures contract, premium or discount, and price-setting provisions. For other arrangements using futures prices as a pricing benchmark, the export contract shall specify pricing provisions recognized by DCE, such as a pricing formula incorporating futures prices;
2. A pilot enterprise may carry out a project through multiple contracts, provided that the aggregate executed export volume under the contracts for a single product is no less than 500 metric tons;
3. The buyer and seller in a cross-border transaction shall not be under the same actual control or be affiliated enterprises.
II. Implementation Procedures
(I) Enterprise Filing (Project Registration)
Category I Enterprises shall be subject to a filing-based procedure, while Category II Enterprises shall be subject to an approval-based procedure.
After conducting a preliminary qualification review of enterprises intending to participate in the pilot program, the futures company shall submit the Application Form for Filing (Project Registration) of Pilot Enterprises for Export Pricing of Petrochemical Products to DCE. Upon completion of DCE's review, qualified enterprises will be included in the list of pilot enterprises.
Following the completion of filing (project registration), DCE, the futures company applying for the project, and the pilot enterprise shall enter into a tripartite cooperation agreement.
The deadline for enterprise filing (project registration) is December 31, 2026.
(II) Order Registration
An enterprise may submit an order for registration only after its filing (approval) has been completed. The signing date of an order contract shall not be earlier than the date on which the enterprise's filing (approval) is completed.
Within 10 business days after a pilot enterprise signs an export order, the futures company shall submit the Statistical Form for Export Pricing Pilot Order Registration Information to DCE to complete the order registration.
(III) Project Completion Application
After the relevant export order has been shipped, declared to customs, and the export proceeds have been received, the futures company shall centrally collect the complete set of supporting documents and submit the project completion application during the pilot period. The deadline for submitting project completion applications is November 30, 2027.
For projects using futures prices as a pricing benchmark, the documents required for the project completion application include:
1. Summary Form of Documents and Information for Completion of the Export Pricing Pilot Program;
2. Project Completion Report for the Export Pricing Pilot Program;
3. Export contracts/supplementary agreements and records of price-setting communications confirmed by both the buyer and seller;
4. Export customs declarations, commercial invoices, and bank receipts evidencing the receipt of export proceeds;
5. Futures trading statements or relevant risk management materials.
For projects using futures prices as a benchmark for margin top-up, the documents required for the project completion application include:
1. Summary Form of Documents and Information for Completion of the Export Pricing Pilot Program;
2. Export contracts/supplementary agreements;
3. Export customs declarations, commercial invoices, and bank receipts evidencing the receipt of export proceeds, including transaction records relating to funds used for margin top-up.
All supporting documents shall contain mutually consistent information and correspond to one another to ensure full-process traceability.
(IV) Project Completion Review
DCE will conduct a compliance review of the submitted project completion materials, with a focus on verifying the validity of contractual pricing provisions, the authenticity of price-setting activities, and the linkage between futures trading and the relevant export orders. Where any document is deemed questionable, DCE may require the enterprise to provide supplementary explanations or supporting materials.
Upon approval of the project completion application, DCE will provide the applicable support funds to the futures company applying for the project in accordance with the cooperation agreement.
III. Support Scheme
(I) Support Standards
For projects using futures prices as a pricing benchmark, where the futures pricing weight is 50% or above, a basic project support amount of RMB 100,000 will be provided. For each additional trading counterparty, as determined based on actual control, an additional RMB 50,000 will be provided.
Where the futures pricing weight is 20% or above but below 50%, a basic project support amount of RMB 50,000 will be provided. For each additional trading counterparty, as determined based on ultimate control, an additional RMB 50,000 will be provided.
Where a project involves multiple contracts for a single product, the contract with the lowest futures pricing weight shall be used as the basis for determining the applicable support amount.
For projects using futures prices as a benchmark for margin top-up, a fixed support amount of RMB 10,000 will be provided for each enterprise and each product.
Where futures prices are used both as a pricing benchmark and as a benchmark for margin top-up, the support amounts under the two arrangements shall be calculated on a combined basis.
(II) Support Caps
A single pilot enterprise may participate in the pilot program for multiple products. The maximum support amount for each product shall be RMB 200,000, and the aggregate support amount across multiple products shall not exceed RMB 300,000.
(III) Treatment of Special Circumstances
If the aggregate amount of support for projects that have passed the project completion review exceeds the total project budget, priority shall first be given to projects involving Category I Enterprises and then projects involving Category II Enterprises.
Within the same priority category, support shall be provided in descending order of project order value until the project budget is fully utilized.
IV. Handling of Violations
This pilot program will be subject to full-process, penetrating supervision. DCE will conduct cross-checks using futures trading data, customs declaration data, foreign exchange receipt and payment data, and other relevant information, and may conduct on-site and off-site inspections from time to time.
Where any of the following violations occurs, DCE may, depending on the severity of the circumstances, reject the application, cancel the pilot qualification, recover in full any support funds already disbursed, suspend the relevant futures company or enterprise from participating in subsequent projects, or take other measures:
1. Fabricating export orders or forging contracts, customs declarations, receipts, or other documents to improperly obtain support funds;
2. Conducting circular transactions among affiliated parties or repeatedly registering the same orders;
3. Other violations of this Notice or other relevant rules of DCE.
V. Miscellaneous
DCE reserves the right to interpret this Notice.
1. DCE reserves the right to make necessary adjustments to the relevant requirements of this Notice based on the actual operation of the pilot program. Any such adjustments will be separately notified.
2. In the event of changes in regulatory requirements, or where circumstances arise that render the continued implementation of this pilot program unfeasible, DCE reserves the right to adjust, suspend, or terminate the pilot program. Any such changes will be separately notified.
Contact: Wang Yuning
Designated Email for Submission of Project Materials: erm@dce.com.cn
Disclaimer: This English translation may be used for reference only. In cases there is any discrepancy between the English version and the original Chinese version, the original Chinese version shall prevail. Dalian Commodity Exchange may change or update this English translation without any prior notice and shall accept no responsibility or liability for damage or loss caused by any error, inaccuracy, misunderstanding, or change with regard to this English translation.
