Ten years of rapid development The futures market and the chemical industry take off together

Petrochemical industry is the pillar industry of the national economy, oil, natural gas and other primary raw materials and downstream energy, plastics, fertilizer and other petrochemical intermediate products are widely used in industry, agriculture, national defense, science and technology, people's life and other fields, related to national food security, energy security and national defense security
。 Since the 18th National Congress of the Communist Party of China, the chemical industry has achieved both quantitative and qualitative improvement, with total industry revenue and profit increasing by 30.
0% and 126.
8% year-on-year in 2021, both hitting a record high, and the total profit has exceeded the trillion yuan mark for the first time, reaching 1.
16 trillion yuan, with a large industrial volume and a complete system, and has made great progress
on the road to a chemical power.

At the same time, it should also be noted that under the background of the implementation of the "dual carbon" policy and the complex international market environment, the petrochemical industry is facing the test of many uncertainties and risks, and more and more petrochemical industry enterprises have begun to participate in the futures market to manage risks
.
In the past ten years, Dashang has continued to expand the product supply of chemical futures varieties, and has successively launched a number of plasticized futures, options and other derivatives, effectively helping industrial enterprises hedge price risks, achieve stable operation, and contribute futures to
the high-quality development of the chemical industry in the process of vigorous development of the industry.

Continuously deepening reform and development, the ten-year report card of the chemical industry is full of highlights

In the past decade, China's chemical industry has been vigorously developed, driving into the fast lane of high-quality development, continuously strengthening the energy and chemical supply assurance capacity, continuously improving the self-sufficiency rate, and maintaining steady growth in key industrial areas, achieving the expected indicators
.
Under the resource endowment conditions of "more coal, less oil, and lack of gas", China vigorously develops modern coal chemical industry, forming a strategic pattern of "petrochemical industry as the main body, diversified supplement of coal chemical industry", and the main products coal-to-oil, coal-to-olefin, coal-to-ethylene glycol, and coal-to-gas have all achieved large-scale industrial production, which is of great
significance for reducing the dependence of imported crude oil and improving the guarantee capacity of China's chemical raw materials.
Taking polypropylene as an example, polypropylene is widely used in household goods, automobiles, optical fibers and other fields, and is an important raw material
for epidemic prevention supplies such as masks and protective clothing and daily necessities such as convenience lunch boxes and food packaging bags.
After the rapid development of coal chemical technology, China's polypropylene production increased from 11.
22 million tons in 2012 to 29.
27 million tons in 2021, with an average annual growth rate of 10%.

At the same time, China's chemical industry has deeply promoted supply-side structural reform, achieved good results during the "Thirteenth Five-Year Plan" period, and achieved obvious results in industrial restructuring and transformation and upgrading, making China's chemical industry rise rapidly, market size and revenue have reached a new high, and has become the world's largest chemical country: in 2021, the industry's operating income will be 14.
45 trillion yuan, and the total profit will be 1.
16 trillion yuan, an increase of 32% and 42% respectively over 2012; The total import and export volume of the whole industry was 860.
08 billion US dollars, an increase of 35% over 2012, of which the total export value was 295.
55 billion US dollars, an increase of 70%
over 2012.

In recent years, the prominent contradiction of backward overcapacity in the petrochemical industry has also been effectively alleviated, high-end industries and strategic emerging industries have grown rapidly, and the industrial layout has taken new steps
towards park and base assembly.
By the end of 2020, there were 616 key chemical parks or industrial parks with petroleum and chemical industry as the leading industries, and the scale advantage of the chemical industry layout is emerging, and the three major petrochemical industry agglomeration areas in the Yangtze River Delta, the Pearl River Delta and the Bohai Bay Area have begun to take shape, driving the rapid development of leading enterprises and private enterprises, and gradually increasing
industrial concentration.

Zhao Jungui, vice president and secretary general of Sinopec Federation, said that at present, China has built the world's largest chemical industry system, the most complete raw materials and the greatest development potential, producing 40% of the world's chemicals, forming the world's most promising energy and petrochemical commodity market
.
The petrochemical industry has achieved such impressive results in recent years, which shows that China's petrochemical industry is still in a period of strategic opportunities for development, and highlights the extreme importance of
the petrochemical industry to the development of national strategic emerging industries, the improvement of people's healthy living standards, and the security of basic products to ensure national energy security and food security.

The integration of industry and finance continues to deepen, and the futures market has always accompanied each other

The past decade has been a decade of "transformation" and rapid development of the chemical industry chain, and it is also a decade
of deepening the integration of industry and finance.
With its basic functions, the futures market provides an excellent place
for chemical industry enterprises to refer to prices and avoid risks.
In recent years, factors such as fluctuations in international crude oil prices, complex international trade situation, and profound adjustment of industrial structure have led to increased uncertainty faced by the chemical industry in production and operation, making deepening the integration of industry and finance and using the derivatives market to manage risks gradually become an important direction
for the development of the petrochemical industry over the years.
At the same time, the emergence of emerging trade models such as basis trading and rights trading has also changed the long-standing situation of enterprises "fighting alone" in the spot market, transforming the previous relationship between the traditional trading sides into a win-win relationship
.
More and more chemical industry enterprises change their business ideas and models, and try to use the futures market to solve various problems
encountered in procurement, production and sales.

Taking the plasticization industry as an example, the early plasticizing industry enterprises have limited understanding of the futures market, and the concept of using the derivatives market to solve various problems encountered in procurement, production and sales is relatively immature, and the overall anti-risk ability of the industrial chain is weak
.
With the gradual development of the futures market and the deepening of the cognition, understanding and application of the futures market in the plasticizing industry, the basic functions of financial derivatives such as futures and options have played a deeper role
in optimizing the industrial trade model, breaking the upstream and downstream game dilemma, and promoting the effective connection of the futures spot market.

"The company began trading futures in 2007
.
At first, there were still some concerns about trading, only to do a small number of trial transactions, and then gradually found that the futures market is an effective channel to pass on risks and lock in profits, and it is also an important tool for
inventory cost management.
Now it has gradually developed to the point that futures have become one of the tools for locking production profits and pre-selling of forward finished products in the process of
supply chain integration services.
Gao Quan, deputy manager of the transaction management department of Zhongda Chemical Group Co.
, Ltd.
, said
.

Before 2016, the pricing and trade mode of the chemical industry market such as polyethylene and polyvinyl chloride was still based on traditional models such as "upfront price", upstream listing sales, auction, and monthly settlement, and it was difficult for buyers and sellers to reach a consensus
under the condition of increased market price fluctuations.
With the increase of the trading volume and industrial participation of the chemical sector of large commercial firms, the futures prices widely recognized by industrial enterprises have gradually formed, and the basis trade model of "futures price + basis" pricing has begun to be accepted
by the market.
At the same time, with the continuous improvement of chemical futures of large commercial firms, new trade models such as basis trade and rights trade have begun to be promoted to various
chemical variety markets.
Thanks to new trade models such as basis trading, the function of futures instruments has been raised to a new height, and chemical industry enterprises have become more and more interested in participating in the futures market
.
According to data from large commercial firms, in 2021, the customer positions of 6 chemical futures trading legal persons accounted for more than 70%, many leading enterprises in the chemical industry participated in the large commercial market for risk management, and plastic and chemical traders in East China and other places generally used the futures prices of large commercial firms for basis trading
.
Today's large commercial petrochemical sector has become one of
the most mature and industrial participation sectors in the large commercial and national futures markets.

"The trade mode of the chemical industry has gradually changed
from spot sales and forward pre-sales to the combination of industry and finance, basis trading and other modes.
In the process of such a transformation, the market pricing model will also change simultaneously, from the initial ex-factory price pricing of petrochemical plants, to the current more and more enterprises through futures disk plus discount pricing
.
Liang Mei, a researcher at Zhejiang Tomorrow Holding Group Co.
, Ltd.
, said
.

Close to the industry to polish the product system, to provide refined futures services

Today, the futures market has developed from an unfamiliar trading market to a risk management market recognized by the industry, and the industry-finance integration model of the chemical industry has been further deepened
.
With the continuous development of the market in the chemical sector of large commercial firms, meeting the increasingly clear personalized and refined risk management needs of chemical industry enterprises has become an important direction
for the construction of Dalian futures market.

Starting from the actual needs of the petrochemical industry, Dashang has listed 6 petrochemical futures and 4 petrochemical option products, building a hedging tool system
for China's petrochemical industry from basic raw materials to processed products, both futures and options, both on-market and off-market.
In 2021, the trading volume and average daily position of petrochemical futures of large commercial futures reached 780 million lots and 2.
5 million lots, accounting for 33% and 24% of the total futures and options transactions and positions of large commercial futures, and the quality of market operation continued to improve, the correlation and hedging efficiency of the spot prices of the six chemical futures futures exceeded 90%, and the continuity of active contracts was significantly improved
.

Behind this achievement is to improve products and rules and systems
in line with industry trends.
In recent years, Dashang has established the development concept of "serving the real economy and innovating to keep up with market demand", closely combined with the development trends and varieties of the petrochemical industry and other development trends and varieties to formulate a package of policies and measures to promote the function of futures contracts, "one product, one policy" to optimize the contract rules system, including optimizing delivery quality standards, adjusting the discount of each index and the benchmark delivery place, etc.
, to ensure that futures contracts are always aimed at the mainstream spot commodities in the market, and solve the "pain points" that restrict the function of chemical derivatives and industrial participation.
Promote the high-level matching
of market functions with the needs of the petrochemical industry.

For example, in the field of plastic chemicals, PVC and other plasticizers have distinct brand characteristics, and the pricing of trade links will refer to the brand situation
.
In the early stage of PVC futures listing, the futures price did not reflect the delivery commodity brand information, which affected the enthusiasm of
enterprises to participate.
To this end, in 2015, Dashang took the lead in implementing brand delivery on PVC varieties, setting a brand threshold for entering delivery, and only brands recognized by the exchange were allowed to enter futures delivery, stabilizing buyers' expectations
.
After the implementation of the brand delivery system, the price correlation between PVC futures and mainstream spot products in East China remained at a high level of 85%, and the hedging efficiency remained above
90%.
At the same time, the number of customers holding positions in 2016 surged by 337% year-on-year, and the willingness of customers to participate increased significantly
.

After the mature operation of PVC varieties for many years, the brand delivery system has been expanded to linear low-density polyethylene and polypropylene varieties, and continues to expand the capacity of inspection-free and delivery brands, guiding mainstream products and brands in the spot market to participate in futures delivery, and helping more entities and brands to become bigger and stronger
.

In the field of liquid chemical industry, Dashang actively adapts to industrial changes, promotes the expansion of delivery layout to new main styrene producing areas, expands the coverage of delivery areas to 9 provinces and cities, covers nearly 90% of the country's production and sales, and supports more enterprises in production and sales areas to participate in delivery
.
By optimizing the delivery layout and giving full play to the delivery function, it is convenient for industrial enterprises to carry out physical delivery, which can promote the flow of factors between regions and the effective docking between supply and demand, which in turn helps to eliminate market segmentation and promote the distribution and circulation of
commodities.

The improvement in the continuity of active contracts is another significant change
in the petrochemical sector of large commercial firms in recent years.
Dashang continues to promote the market maker system as the core, covering the whole process of trading, delivery, clearing, risk control, marketing and other work programs, combined with the characteristics of chemical varieties and market changes "according to the product", effectively improve the continuity of the main contracts of multiple petrochemical varieties, the activity of near-month contracts, such as styrene futures in 2021 non-January/May/September contract trading volume and position accounted for 68% and 70%, respectively, an increase of several times compared with the same period in 2020, and monthly delivery
.

In addition to the high-quality construction of the petrochemical on-site derivatives market, large commercial firms have also opened up a new "battlefield"
for petrochemical services outside the market.
Since the end of 2020, it has strategically launched the construction of the "one circle and two centers" OTC market, and has successively launched a series of innovative attempts
in OTC business such as basis trading, standard warehouse receipt trading, and non-standard warehouse receipt trading around the three major sectors such as energy and chemical industry.
In 2021, a total of 6,277 OTC transactions were made for the OTC business of Nenghua Varieties, with a notional transaction amount of RMB18.
26 billion, accounting for 34%
of all OTC business.
Up to now, a total of 96 off-market members of the chemical sector have actively participated
.

Based on the new stage of development, continue to improve the ability to serve the chemical industry

Since the 18th National Congress of the Communist Party of China, the chemical industry has entered a stage of rapid development, the industry has maintained stable and rapid development overall, the comprehensive strength has been significantly enhanced, and China's chemical industry has ushered in a new situation
of high-quality development.
As an important supplement to the spot market, the futures market has accompanied and coordinated development with the chemical industry for many years, forming an industry development trend
of combining industry and finance and complementing advantages.
The relevant person in charge of the firm said that the firm will continue to closely combine the new situation and new problems of the development of the petrochemical industry, carefully build and polish the chemical derivative product system, provide higher quality services for the chemical industry, and work together with the industry to build a national unified market
with high-quality development.

The first is to further enrich the petrochemical derivatives product system
.
Accelerate the listing of futures such as pure benzene, sulfur, ethanol, glacial acetic acid, petroleum coke, and options such as ethylene glycol and styrene, and further enrich the industrial risk management toolbox; Promote the R&D and listing of strategic futures such as Northeast Asia crude oil futures and container capacity futures, and serve the petrochemical industry chain to hedge the risk of international price fluctuations; And focus on the national strategy of green and low-carbon, strengthen the development and design
of clean energy products.

The second is to optimize the contracts
of listed varieties based on industrial demand.
Accelerate the implementation of the plastic variety group delivery system and the revision of the plastic brand measures, focus on the needs of the petrochemical industry, continuously expand the delivery area in plastic varieties and other energetic varieties, continue to improve the variety contract brand delivery system, increase the delivery brands of polyethylene, polyvinyl chloride, polypropylene and other varieties, continuously improve and optimize the existing variety contract rules around the green concept, and help form a more open and transparent green pricing mechanism
.

The third is to continuously strengthen service capabilities to solve the problems of
industrial customers.
Further increase the expansion of industrial enterprises, continue to optimize market service brands such as "Large Commercial Enterprise Wind Plan", "DCE Industrial Bank" and "Industry and Finance Base", give full play to the demonstration and leading driving effect of typical models in the chemical industry, further promote the application of over-the-counter options, basis trading and other business models in industrial enterprises, and promote the integration of industry and finance in the petrochemical industry to the depth.

The fourth is to continue to promote the coordinated development of
the on-market and off-market markets.
Enrich petrochemical OTC trading varieties and tools, increase efforts to introduce OTC members of the chemical sector, create an OTC ecosystem with the real industry as the main body and the participation of futures and cash companies, and promote the linkage of
futures and spot prices.
Explore cooperation with leading enterprises in the energy industry, build enterprise trading zones on over-the-counter platforms, and solve the pain points
of enterprise future-cash linkage business.

Fifth, closely follow the internal circulation to promote high-level opening up
.
Actively promote the introduction of petrochemical futures and options with a high degree of internationalization such as ethylene glycol into overseas traders, strive to enhance the price influence of petrochemical varieties, and serve petrochemical industry enterprises to better participate in global trade and international petrochemical products to better connect with the domestic market
.