Short fiber futures inject new vitality into the polyester industry chain
Delivery volume has hit new highs in the past year since its listing
On October 12, 2020, the polyester industry chain family in the futures market welcomed a new member-short fiber futures. As the “new darling” of the family, the trading volume and open interest of short fiber futures have increased steadily in the past year since its listing, market participation has continued to increase, futures and spot prices have been closely linked, and the price discovery function of the futures market has been fully exerted. Thanks to active participation in the industry chain, delivery volume has hit record highs, becoming a highlight of the year since short fiber futures were launched.
Industry chain companies actively participate
After the listing of short fiber futures, market entities including upstream and downstream short fiber factories, traders, futures companies, etc. have widely participated. Data shows that since the launch of short fiber futures, the average daily turnover has been 235,000 lots, the average daily position has been 176,000 lots, and the correlation coefficient between futures and spot prices is as high as 0.97. Jiangyin Hongkai, Jiangyin Xinlun, Huaxi Chemical Fiber, Fujian Jinlun, Desai Chemical Fiber, Xiamen Xianglu, Fujian Yijin, Yizheng Chemical Fiber, Fujian Jingwei and other brands have successively registered warehouse receipts. The total number of warehouse receipts registered is 27,031, equivalent to spot goods 135,155 tons. The total delivery volume of short fiber futures was 15,220 lots, equivalent to 76,100 tons of spot goods. Not only did short fiber futures achieve continuous delivery, but the delivery volume of the 2107 contract exceeded 7,000 lots, setting a new high for a single contract delivery volume, showing the enthusiasm of enterprises in the polyester industry chain to participate.
“Short fiber futures have been on the market for one year, and have experienced an increase in consumption recovery after the COVID-19 epidemic last year and a decrease in processing profits due to reduced demand this year. The price trend is in line with the fundamentals.” Pang Chunyan, senior analyst at SDIC Essence Futures explain.
Fei Yang, head of the chemical fiber group of Yongan Capital, told a reporter from Futures Daily that before the listing of short fiber futures, there was a large gap between the spot price fluctuations of short fiber and several upstream raw materials. After the listing, the fluctuations of the short fiber industry chain tended to be consistent. This It has a positive effect on the stable production of upstream and downstream enterprises.
The relevant person in charge of Fujian Jinlun High Fiber Co., Ltd. said that before the listing of short fiber futures, the cotton staple fiber spot market lacked a unified guidance price, the regional price difference was large, and sometimes the quotation would appear three times in a day. The above fluctuations expose companies to greater operational risks. After the listing of short fiber futures, it provides an authoritative price benchmark for polyester companies. Companies can lock in raw material prices or processing profits according to the production cycle; they can also lock in the market to ensure sales profits, and at the same time realize spot sales or purchases through futures delivery. It broadens purchasing and sales channels; inventory management can also be carried out through the futures market to ensure the stability and continuity of enterprise production. At present, many short fiber traders in Jiangsu and Zhejiang have integrated basis trade into spot trade.
Fei Yang believes that the reason why the upstream, midstream and downstream of short fiber are more involved in futures is mainly because in addition to the needs of its own industrial chain, PTA futures serves as a polymer The most mature varieties used in the ester industry chain have laid a very good foundation for the use of futures in the short fiber industry chain. Moreover, with the establishment of traders’ factories, more futures models have followed. Traders’ factories have added liquidity to the market and enhanced the pricing return function of short fiber futures. At the same time, they serve as a link between upstream and downstream and futures The connecting bridge has activated the short fiber futures market.
The listing of short fiber futures has also further improved the effectiveness of corporate risk management. During the interview, the reporter learned that before the listing of short fiber futures, companies used PTA futures for indirect hedging, which could lock in the cost of raw materials. However, most short fiber is sold in spot, and the product selling price cannot be locked in advance. After the listing of short fiber futures, companies can not only lock in costs in PTA and MEG futures, but also lock in product prices through short fiber futures, thereby locking in production profits and improving the risk management effect of the company.
It is understood that after the listing of short fiber futures, Zhengzhou Commodity Exchange promptly launched PTA-short fiber cross-variety arbitrage instructions to facilitate industrial enterprises to better use futures tools to avoid price risks; it is close to the online and offline (300959) rules of multi-party organizations in the market Training; introducing traders’ factories in batches, adding production factories, expanding delivery brands, smoothing delivery channels, etc. Industrial customers are more familiar with short fiber futures and delivery processes, and more industrial customers are actively participating in the futures market.
Basis spread acceptance continues to increase
At present, goods bought and sold in the upper, middle and lower reaches of the short fiber industry chain are basically priced with reference to the short fiber futures market price and basis. The acceptance of short fiber futures by industry chain enterprises is also increasing. Basis trading is playing an important role in the industry. Widely popular in the chain.
“The model of basis trading and spot market trading with reference to futures prices also reflects the gradual acceptance of the futures price discovery function by the market.” Li Feng, general manager of Huayicheng, said that the biggest benefit brought by the listing of short fiber futures is Revitalizing the entire short fiber market.
Before the launch of short fiber futures, downstream yarn mills were accustomed to preparing raw materials in full at one time based on terminal orders. After the listing of short fiber futures, yarn mills changed the traditional physical stocking method. The reporter learned that a domestic state-owned textile factory received an order for 900 tons of yarn in June this year and required 600 tons of short fiber. Enterprises purchase spot goods in batches at different prices as needed, and close corresponding futures positions in sequence, locking the raw materials into the desired position.� price, and saved nearly 30,000 yuan in costs, effectively ensuring corporate profits.
“Looking at the current market environment, my biggest feeling from participating in short fiber futures is that the absolute price of products to downstream customers has become lower; customers’ purchasing patterns and purchasing mentality have changed, and prices have begun to be priced at a periodic low. Procurement has improved pricing efficiency.” Li Feng said that the combination of futures and cash has enabled short fibers to be delivered to end industry customers at relatively low prices. Customers’ reduction in raw material procurement costs is conducive to the development of the end market.
Li Feng said: “Currently, the short fiber industry is facing new changes. Industry profits will continue to decline in 2021. Possible expansion of production capacity and elimination of competition in the future are inevitable. Good use of futures tools can help companies survive in fierce competition. Gain an advantage.”
During the interview, the reporter learned that while polyester companies are quickly learning, familiar with and using short fiber futures to manage production and operation risks, they are also looking forward to the launch of more futures varieties such as bottle flakes, filament, and PX to further improve the industrial chain. Upstream and downstream risk management tools protect the sound operations of upstream and downstream enterprises.
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