Zhengzhou Commercial Exchange basis trade linked price point service PTA industry promotion meeting was held

On May 25, the “Zhengzhou Commodity Exchange Basis Trade Linked Price Pointing Service PTA Industry Promotion Conference” hosted by Zhengzhou Commodity Exchange was held in Hangzhou. This promotion meeting attracted widespread attention from mainstream enterprises in the polyester industry chain. More than 200 representatives from polyester industry enterprises across the country attended the meeting. Participants showed strong interest in the linked price point function of basis trade.

It is understood that with the maturity of PTA futures, the development of the industry and the changes in the market structure, more abundant pricing models have emerged in the polyester market. Among them, the basis difference has become the mainstream offline model in the polyester industry. , plays an important role in trade. At the beginning of this year, the linked price point function of basis trade was launched on the comprehensive business platform of Zhengzhou Commodity Exchange, which further improved the efficiency of basis trade and eliminated the pain points of personnel occupation and position closing slippage in basis trade.

In recent years, in order to open up the “last mile” of the futures market serving entities, Zhengzhou Commodity Exchange has continued to make efforts to explore new ways and new ways for the futures market to serve the real economy. According to the relevant person in charge of Zhengzhou Commodity Exchange, combined with the current situation of offline basis trade, this year the comprehensive business platform of Zhengzhou Commodity Exchange launched a linked price point function based on basis trade business, and further optimized it based on market feedback. Customers who currently have multiple futures accounts can not only choose the positions in their futures trading accounts to close their positions, but also set the liquidation ratio based on the hedging ratio. For customers who use the platform’s basis trade listing transaction, when the price-pointing party makes a price call, the platform will freeze the margin of the price-pointing party, which improves contract performance capabilities and transaction efficiency to a certain extent.

For the polyester industry, the emergence of linked price points not only meets the needs of market development, but also gives full play to the futures price discovery function and promotes the steady development of the polyester industry.

The reporter learned from the venue that basis trading has become the mainstream of the market. Market bids only hear about basis and rarely “fixed price”. Starting in 2021, the PTA market basis spread has entered a contract mode. Bu Hongfeng, general manager of Hangzhou Zhongpu Investment Consulting Co., Ltd., said that basis trading currently accounts for more than 95% of the PTA spot market. For suppliers such as Yisheng Petrochemical, 30% of the contract volume this year has been determined by buyers. It has changed the previous simple average price model of PTA long-term contract.

“The introduction of partial price-pointing rights by upstream manufacturers is equivalent to the fact that upstream manufacturers assume the role of part of the traders and can provide more comprehensive services to downstream polyester factories.” Industry insiders said that currently traders basically use basis points. The model is quite mature. The polyester factory uses post-price pricing, which will not affect the factory’s raw material supply regardless of the price. It can lock the purchase cost of raw materials in sync with sales to achieve stable operations. After polyester factory price increases, some factories reduced their contract purchasing ratios, and spot trade volume expanded accordingly.

It is worth noting that since post-price pricing gives the initiative to downstream factories, it also involves a question of judging the pace of the market. “A price change in the early stage of a post-price transaction will bring some default risks.” Dong Li, general manager of China Base Ningbo Polyester Division, said that trade price points mostly use advance payment, and sometimes the market changes too much. Exceeding the risk “safety cushion” that can be achieved by advance payment, you face the risk of default. Not only that, there are also cases where the price pointer misses the desired price due to manual placing of orders, and information asymmetry may cause disputes between buyers and sellers over the closing results.

“The launch of linked price point meets the current needs of the entire polyester industry. This function is in line with offline transaction habits and is easy for customers to accept and use. Linked price point makes the price point results real, effective and accurate, improving traditional trade links. The intermediate pricing speed saves time and costs, and also avoids disputes that may be caused by manual operations.” Dong Li said.

In his view, the fact that the Zhengzhou Commodity Exchange can simultaneously launch new functions of linked price points in response to changes in the polyester market is a reflection that the futures market can fully approach the spot market. Enterprises in the industry chain also have a positive learning attitude and actively participate in relevant market cultivation activities, hoping to participate as soon as possible.

The reporter learned that Zhengzhou Commodity Exchange has increased the number of warehouse receipt transactions and basis trade varieties on the platform to 15, further broadening the service scope of the platform.

“The rapid development of various businesses of Zhengzhou Commodity Exchange’s OTC comprehensive platform meets the risk management needs of real enterprises and promotes the development of futures and cash integration. As the platform gradually expands its range of warehouse receipt trading varieties, various models have become more diverse. With the three-dimensional development of levels, the market size will further increase.” said Li Jie, deputy general manager of Galaxy DeRui’s futures business department.

According to the relevant person in charge of Zhengzhou Commodity Exchange, Zhengzhou Commodity Exchange will closely focus on the service market to further enrich the connotation and extension of online businesses such as warehouse receipt trading, basis trading, and OTC options. By enriching OTC transactions, model, improve the on-site (off-site and off-site) linkage mechanism, and expand the scope and radius of outreach cooperation services to further enhance service capabilities and levels. The first is to realize docking with other platforms, give full play to their respective advantages, and realize off-siteMake the platform bigger, better and stronger. The second is to carry out research on non-standard warehouse receipt business, launch non-standard warehouse receipt transactions, enrich non-standard warehouse receipt application scenarios, and output standards and management for spot goods.

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