Serving styrene enterprises to avoid risks, presenting the 70th anniversary of the founding of New China, the 70th variety of derivatives in our country - styrene futures listed
As an important organic chemical raw material, the styrene market has developed rapidly in our country. From 2009 to 2018, our country's styrene production and consumption increased by 11% and 7% annually, making it the world's largest producer and consumer of styrene. Styrene companies suffer from price fluctuations, and they have long been appealing to participate in the derivatives market. With the landing of styrene futures on Dashang Exchange on September 26, the world's largest styrene market will usher in a new era of combined development.
The listing of styrene futures is not only a major event in the styrene market, but also a major event in our country's derivatives market: this is the 70th variety in our country's derivatives market, a gift for the 70th anniversary of the founding of New China.
Price "roller coaster" futures risk avoidance
Styrene industry "upper bearing oil and coal, next connecting rubber and plastic" - the upper bearing petrochemical and coal chemical industry chains, and the next connecting synthetic resin and synthetic rubber industries, play an important role in the chemical industry chain. The styrene industry in our country has a market size of 100 billion yuan and more than 1,000 industrial enterprises. While maintaining a good momentum of development, enterprises are facing the test of price fluctuations.
Wang Fenghai, General Manager of Dashang: Our country is the world's largest producer and consumer of styrene, involving more than 1,000 industrial chain enterprises and a market size of more than 100 billion yuan. In recent years, styrene prices have fluctuated greatly, with price fluctuations reaching 50% to 70% from 2015 to 2018. As the fifth chemical variety of Dashang, listed styrene futures will provide enterprises with effective hedging tools and open, transparent and continuous price reference, which will help enterprises hedge the risk of price fluctuations.
At the same time, styrene futures is the 70th derivative listed in our country. On the occasion of the 70th anniversary of the founding of New China, we present a gift to the 70th anniversary of New China. Since its establishment, Dashang has always adhered to the fundamental purpose of serving the real economy and has become the world's largest futures market for agricultural products, plastics, coal and iron ore. With the listing of soybean meal and corn options, the introduction of iron ore futures to overseas traders and the launch of commodity swap business, Dashang has entered a new development stage of diverse varieties and tools and the opening of the market to the outside world. Starting from the listing of styrene futures, Dashang will launch more new varieties and new tools to serve the real economy, deepen the transformation of the diversified opening strategy, and continue to move towards the development goal of a world-class derivatives exchange.
Contract rules are close to spot characteristics and enterprise needs
Scientific and reasonable futures contract rules are an important guarantee for the future market to function and attract the participation of real enterprises. As the first hazardous chemical species of Dashang, styrene has distinct characteristics in terms of safe production, technical process and inventory turnover. To this end, Dashang has made targeted arrangements in the design of styrene contract rules.
Chen Ruigang, Deputy Director of the Industrial Products Division of Dashang Exchange: In view of the characteristics that styrene may be self-polymerized when stored for a long time at high temperature, Dashang First requires the delivery warehouse to ensure that the temperature of the storage tank for storing futures does not exceed 25 ° C, allowing the spot goods to be mixed during the delivery warehouse period, and flowing receipt and delivery to ensure the quality of the goods. The second is to stipulate that the futures standard warehouse receipts are cancelled centrally on the last delivery day of each month, so that the futures goods are stored in the warehouse for a maximum of no more than 1 month. The third is that the requirements for inbound and outbound polymers are different. According to the study, under the normal summer temperature of the benchmark delivery site in East China, closed and left to stand for one month, the increase in the index of the polymer will not Therefore, it is stipulated that the polymer content should not exceed 6PPM when entering the warehouse and 10PPM when leaving the warehouse.
Finally, styrene is a hazardous chemical, and customers participating in the delivery must have relevant qualifications for the production, operation or use of styrene. Specifically, before the last trading day of the month before the delivery month, member units enter their customers' hazardous chemical-related license information into the electronic warehouse receipt system and update it in a timely manner. In general, Dashang has made corresponding arrangements for the contract rules according to the characteristics of styrene spot, which is better close to the needs of physical enterprises to participate in futures hedging and delivery.
Companies are eager to list styrene futures
Listed styrene futures have always attracted great attention from all parties in the market. In the face of severe price fluctuations, many industrial enterprises have long appealed to listing styrene futures, using futures tools to price and manage risks. However, the market has lacked derivatives hedging platforms and open and transparent price signals that can fully meet demand. With the listing of styrene futures, this situation is expected to improve.
Zhu Shunlin, Chairperson and General Manager of Jiangsu Rishide Chemical Industry:
Our country is the world's largest producer and consumer of styrene. Last year, there were 45 styrene production enterprises in our country, with an annual production capacity of 9.26 million and an actual output of 7.68 million, accounting for about 25% of the world. In 2018, the apparent domestic consumption of styrene was about 10.50 million tons, accounting for about 35% of the world.
Shanghai SECCO Petrochemical Business Manager Gu Sumin:
Styrene has always been called the "devil variety", referring to its frequent price fluctuations. On the one hand, upstream and downstream enterprises are more sensitive to changes in the commodity sector and the overall business environment. On the other hand, the obvious changes in styrene costs, especially the international trade friction and the international anti-dumping measures started last year, have a great impact on styrene production.
Zhou Jun, Deputy General Manager of Nantong Chemical Light Industry:
With the listing of styrene futures and the increase in domestic styrene production capacity, the market will derive more pricing models. For enterprises, after listing styrene futures, enterprises can effectively avoid risks through some hedging operations. In the future, with the increase in production capacity, we will have a large number of styrene products exported, and the future market can also help the export trade to develop smoothly.
