Short fiber futures help industrial customers solve procurement costs, terminal sales and other issues

At the PTA and short fiber sub-forums of the 2021 China (Zhengzhou) International Futures Forum, Qingdao Huayicheng Materials Co., Ltd. (hereinafter referred to as Qingdao Huayicheng ) General Manager Li Feng said that in recent years, Qingdao Huayicheng has also done a lot of work in using its own channel advantages to work with state-owned futures companies to solve terminal sales problems and expand corporate procurement channels.

“After the short fiber futures were launched, many large state-owned trading companies entered the market with funds and made reasonable arbitrage through futures. However, they also encountered sales problems in the terminal market, because polyesterThe short fiber market is characterized by scattered industries, small scale, serious advance financing, and slow shipment speed. It is different from the characteristics of the upstream PTA industry, which is large in scale, concentrated in industry, and large in and out. It is difficult to achieve rapid withdrawal of funds and maintain sales channels. The cost is relatively high.” Li Feng said that after learning about this situation, we used our mature and stable sales channels to sell the company’s polyester staple fiber one by one. Shipped to Shandong, Hebei and all over the country, it solves the problem of spot sales and has established good cooperative relations with many spot companies, speeding up the withdrawal of funds from spot companies and reducing capital costs. At the same time, it also reduces our procurement costs, increases sales volume, mutual benefits, and increases the enthusiasm of futures merchants to participate.

Li Feng said that Qingdao Huayicheng currently purchases more than 3,000 tons of goods from futures companies through basis differences every month on the basis of completing more than 8,000 tons of long-term contracts per month, among which it has reached a mature agreement with a large group. Cooperation model, the purchasing volume is around 1,500 tons/month. “The spot market has opened up new purchasing channels for our company, from single contract purchasing to flexible spot purchasing. This has also become a new business growth point for our company, which has increased our company’s monthly sales by about 30%. A win-win cooperation was achieved,” he said.

Since this year, Qingdao Huayicheng has participated in futures basis spreads by serving relevant enterprises, helping them reduce raw material procurement costs, increase the number of foreign trade orders, and achieve the goal of “guaranteing supply and stable price”; in addition, it also uses futures tools to help terminals State-owned textile enterprises reduce procurement costs, reasonably control risks, and help state-owned textile enterprises maintain and increase their value.

Li Feng gave an example. Zhucheng Chinatex Jinwei Textile Co., Ltd. (hereinafter referred to as Jinwei Textile) is a wholly-owned subsidiary of COFCO. It mainly handles orders for Japanese Uniqlo, Zara and other international brands all year round. The order model is first-order. Price after production. Before the launch of short fiber futures, Jinwei Textile purchased the full amount of polyester staple fiber raw materials for more than three months after receiving the order to lock in the processing fee. However, locking in spot raw materials requires a large amount of funds, which affects the company’s capital flow.

“Therefore, our company actively promotes long hedging in futures to them, using only a small amount of funds to lock in the cost of raw materials, and then purchasing raw materials through price point method to close long positions.” Li Feng said that in June 2021, Gold Wei Textile received an order of 904 tons of T65/C3545S yarn from Japan’s Uniqlo, and should purchase 599 tons of polyester staple fiber from Tianjin Petrochemical and Huaxi Village, with the factory price controlled to within 6,850 yuan/ton.

Li Feng said that in order to save capital costs, he locked in the price of raw materials by going long on the market. On June 7, he directly purchased 159.6 tons of spot goods at a price of 6,850 yuan/ton (including freight). At the same time, 88 long positions were opened on the PF09 contract, with an average of 88 long positions. The opening price is 7050, and the remaining 439.4 tons of unpurchased raw materials are hedged to prevent price increases. Later, they purchased 159.6 tons, 159.6 tons, and 120.2 polyester staple fiber from our company in three batches on June 18, June 30, and July 14 respectively at 09 contract prices of 7052-180, 7030-150, and 7298-140. tons, and at the same time, the long position is closed at the point price.

“Through hedging and price-point purchasing, Jinwei Textile saved about 30,000 yuan in procurement costs. In this way, the customer not only reduced the capital occupation by more than 2 million, but also avoided the risks caused by large market fluctuations and earned Stabilizing processing fees is conducive to the long-term development of enterprises and protects corporate interests,” Li Feng said.

AAA

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