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How China's Plastic Futures Have Passed Since 2007
- Jul 09, 2018 -

  Since 2007, linear low density polyethylene (LLDPE), polyvinyl chloride (PVC) and polypropylene (PP) futures have been listed on the Dalian Mercantile Exchange. After 11 years of development and growth, China's plastics futures market has ranked first in the world.

  In the past 11 years, how do China's plastic futures have gone through? What has changed? At the 2018 China plastics industry conference that has just ended, the representatives of the plastic industry in China said that the price discovery and hedging of futures provided an effective tool for the hedge and pricing of industrial customers, and the traditional trade model based on sales and marketing in the plastic industry has long been changed. The use of futures tools in plastics industry is no longer a novelty. In the future, how to optimize the existing mechanism, create a new mode, and better enable futures tools to serve the real economy has become the most concerned issue.

  Optimizing the contract system 

  To adapt to the market changes in 2017, large merchants LLDPE, PVC and PP three big plastic trading volume (single side, the same below) total of 157 million hands, accounting for 14.3% of the total trading volume of the big business. Among them, PVC futures volume and average daily positions were 39 million hands and 111 thousand and 700 hands, up 247% and 56% respectively over the same period.

  According to reports, in recent years, the PVC futures market has made notable gains in trading and holding positions, mainly due to the brand delivery system implemented in 2015. In 2017, PVC futures added two recognized brand names in Inner Mongolia Ordos and Tangshan Sanyou, which effectively expanded the scope of delivery products. At present, PVC futures include 13 registered brands including 1 exempt brands. In 2017, the PVC futures hedging efficiency reached 92%, and the current price correlation reached 0.96, which is inseparable from the implementation of the registered brand system.

  In recent years, the domestic polyethylene (PE) and PP market fundamentals have changed, production capacity for many years to maintain two digit growth, Iran, Nigeria, the United States and other non mainstream imports by virtue of low price advantage into the domestic market. In addition, due to the influence of policy factors, China will gradually stop importing waste plastics, help increase the price of domestic recycled plastics, and drive the cost of the entire plastics industry to rise. Chen Wei, director of the industrial products Department of the big business institute, said that, in order to adapt to the change in the spot market and to serve the customers in the plastic industry, the big merchants will continue to promote the optimization of the contract system and further reduce the cost of industrial insurance.

Continuous innovation model "plastic" industry future