At the “Dalian Commodity Exchange Special Session” of the 12th China (Shenzhen) International Futures Conference, the draft ethylene glycol futures contract and rules were unveiled on the market.
In recent years, the spot price of ethylene glycol market has been fluctuating significantly. Industry insiders hope that after the listing of ethylene glycol futures, companies can participate in hedging in the futures market. Use market-oriented means to resolve market-oriented price risks.
“From the perspective of the external environment, the crude oil market was relatively strong in early October, and then the continued depreciation of the RMB exchange rate and the hot overall commodity atmosphere drove the recent ethylene glycol From a fundamental point of view, port arrivals have been at a relatively low level, the overall inventory level has been steadily decreasing, and the total base is relatively small; on the demand side, downstream polyester production has started, production and sales are booming, and the overall cash flow of the factory is relatively abundant. The product itself is a virtuous cycle of supply and demand.” A trader from East China who attended the meeting said that the recent increase in ethylene glycol prices is mainly due to the support of fundamentals and the external environment.
“Since this year, the import volume of ethylene glycol has decreased by about 1 million tons.” ICIS Information Manager Shen Ning said that due to the centralized maintenance of foreign equipment and the domestic self-sufficiency rate The slight increase, better demand in the second half of the year than in the first half and tight supply have led to the recent rise in ethylene glycol.
It is reported that the spot price of ethylene glycol has been fluctuating greatly in recent years. From 2010 to 2015, the average annual price fluctuation of ethylene glycol reached 50%. Industrial customers There is a strong desire to avoid price risks, but currently hedging can only be done through local futures markets. “Choosing an electronic trading platform is a helpless choice for our company. If there are futures products, we will definitely go to the futures market to preserve value.” An industry insider said frankly.
Ethylene glycol has a large market scale, a large number of companies, and its industrial status is very important
But at the same time, prices fluctuate greatly. The average industry profit is only about 5%, which is difficult to cover price fluctuations. The industry’s demand for hedging is very strong. “Polyester industry companies can currently only use PTA futures for hedging, which can only lock in part of the raw material costs. If ethylene glycol futures are listed, companies and traders can hedge through the futures market to avoid price fluctuations in spot transactions. risk.” A business person in East China said that after the listing of ethylene glycol futures, it will complement its brother varieties, which will give the industry a more complete hedging chain and help promote the better functioning of related varieties.
And judging from the experience of plastics, PP, PTA, methanol and other chemical products that have been launched, there has been no significant increase in price fluctuations in the spot market before and after the launch of relevant futures products. Or there is a significant difference. On the contrary, with futures instruments, the stable operation of the enterprise can be better achieved.
It is understood that at present, because the coal-based ethylene glycol products have not been on the market for a long time, the quality is not stable enough. At the same time, coal-to-ethylene glycol companies are generally small in scale, with unstable production and insufficient production capacity. Most of them are unable to continuously and stably meet the consumption needs of downstream polyester companies. Therefore, polyester companies have failed to widely accept coal-based ethylene glycol products as raw materials. From the ethylene glycol futures contract and draft rules, we learned that because the coal-based ethylene glycol circulating in the market cannot meet the delivery quality standards, it will not enter the futures market.
Market participants believe that the listing of futures will, to a certain extent, promote the continuous improvement of the quality of coal-based ethylene glycol products, and will eventually be widely accepted by downstream polyester companies. By listing ethylene glycol futures, we can promote the rebalancing of coal chemical and petrochemical production capacity through market-based means.
“Although ethylene glycol is highly dependent on external sources, it does not have the conditions to monopolize spot goods.” Shen Ning said. Judging from the share of imports, none of the relevant companies has an absolute monopoly of the market share. At the same time, since 2010, due to factors such as the commissioning of new domestic ethylene glycol equipment, the proportion of imports from major import sources such as Saudi Arabia and Taiwan to my country’s consumption has been declining year by year. From a global perspective, the overall overcapacity of ethylene glycol is relatively obvious, and the operating rate is gradually declining. “As new production capacity is put into operation in the future, the phenomenon of overcapacity may become more obvious, and there will be no market monopoly environment.” said an industry expert who attended the meeting.
“If ethylene glycol is listed on futures, it is expected to increase the pricing power of the domestic market.” The above-mentioned industry insiders said that because the price formed in the futures market can truly reflect the supply and demand.This situation can provide a reference price for the spot market, which is conducive to forming a price standard that guides and restricts foreign suppliers and improves the initiative of the domestic ethylene glycol market.
Some analysts pointed out that judging from the development experience of domestic and foreign markets, promoting the listing of relevant futures varieties and actively participating in futures trading has become the best way for enterprises to avoid price risks. Market choice. The reporter also learned that the price of chemical fiber industry products, such as polyester staple fiber, also fluctuates greatly, even far exceeding the volatility of the spot price of ethylene glycol. Some chemical fiber companies said that in the future, chemical fiber companies can lock in production costs in the ethylene glycol futures market. At the same time, it is also hoped that polyester staple fiber futures can be listed, so that profits from the sale of finished products can be locked in the polyester staple fiber futures market, thereby using market-based means to avoid the risk of price fluctuations and achieve stable operations.
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