According to the recent notice of the CSRC, the long-awaited ethylene glycol futures in the industry will be listed on the Dashang Exchange on December 10, 2018. This means following PTA After the futures, the polyester industry ushered in a new derivative tool to manage the cost of raw materials. Relevant polyester enterprises said that in the future, they are expected to reduce procurement risks through the futures market and promote the stable and orderly supply of raw materials and production of enterprises.
market price “ Vacillate ” , enterprises need to manage fluctuation risk
The reporter learned that since 2016, with the slowdown of new capacity in the international and domestic ethylene glycol markets and the unexpected growth of polyester terminal demand, the domestic ethylene glycol supply and demand pattern has gradually improved. By the end of October 2018, the domestic ethylene glycol production capacity is expected to be 10.555 million tons, an increase of 27% compared with 2017. The domestic ethylene glycol production capacity has increased year by year, and the market supply and demand pattern and production and operation situation have gradually improved.
According to Wande data, the market price of ethylene glycol (middle price in East China) rose from 5655 yuan/ton in early August 2017 to 8115 yuan/ton in mid May 2018, an increase of 44%. But then, the price of ethylene glycol began to fall. In the middle of November, the price was 6840 yuan/ton, 16% lower than the peak in May.
"In terms of supply, since the second half of 2018, more new coal to ethylene glycol units have been put into production in China, which has significantly increased the pressure on ethylene glycol supply. In terms of demand, the sharp rise in PTA (purified terephthalic acid) prices in August has driven the terminal demand of the polyester industry chain to overdraft in advance. After September and October, polyester and terminal demand have plummeted, and the contradiction between supply and demand for ethylene glycol has intensified. In terms of cost, the international oil price fell sharply in October and the ethylene price in Northeast Asia fell significantly, which together led to the fall of ethylene glycol price. " Wang Guangqian, a researcher of Soochow Futures Energy and Chemical Industry, said.
It is worth noting that despite the rapid growth of domestic production capacity and output, ethylene glycol supply still relies heavily on imports in the face of huge downstream demand. "The domestic polyester production capacity is nearly 53 million tons, the polyester output is 45.5 million tons, and the demand for ethylene glycol is more than 15 million tons. Since 2009, although the dependence on imports has decreased year by year, the proportion of annual imports in consumption is still more than 50%." said the relevant person in charge of Hengyi Petrochemical Company.
Depending on the current situation of foreign import trade, the raw material price of polyester enterprises is affected by the international market environment, exchange rate changes and other macro factors. The trend of increasing domestic output has led to the change of domestic supply and demand and the adjustment of product structure to a large extent, affecting the price change of ethylene glycol market. In this context, the industry has been calling for accelerating the listing of ethylene glycol futures, hoping to use the futures market to reduce the procurement risk of polyester enterprises and help ethylene glycol enterprises cope with price fluctuations.
Provide more complete risk avoidance system for polyester industry
According to relevant market personnel, from the perspective of the whole polyester chain, polyester enterprises mainly produce raw materials such as PTA and ethylene glycol. At present, PTA already has futures instruments, and ethylene glycol futures will be listed in the near future. In the future, polyester industry chain enterprises will have another raw material risk hedging instrument to build a more complete and comprehensive raw material hedging instrument system for enterprises.
The relevant person in charge of Hengyi Petrochemical Company pointed out that in the future, more industrial customers and investors will actively participate in the listing of ethylene glycol futures, and market traders will be more comprehensive and professional, making the price game of ethylene glycol more sufficient and the futures price signal more reasonable. " For enterprises, futures tools are used to obtain and judge the future market price direction, so as to improve the scientific rationality of enterprise production and operation decisions. For the industry, through a large number of industrial customers and investors' open transactions, a price signal reflecting the relationship between market supply and demand is formed, which is conducive to guiding the change of industrial supply and demand pattern, adjusting the pace of production and operation, and providing a place for real enterprises to transfer price risks.
According to the relevant person in charge of Jiangsu Guowang High tech Raw Material Purchasing Department, how to use futures hedging will become a "required course" for polyester enterprises. Recently, polyester enterprises face the risk of substantial depreciation of raw material inventory. After the futures are listed, enterprises can hedge raw material inventory in the futures market.
Ethylene glycol futures not only affect the production enterprises, but also the traders and polyester downstream enterprises in the ethylene glycol industry chain will benefit from it. "Ethylene glycol is a liquid chemical product, and its price volatility is stronger than that of ordinary chemicals. Overlapping traders are involved in a large number, and the characteristics of chasing up and killing down also help to increase the price volatility of ethylene glycol to a certain extent." Wang Guangqian believes that after the listing of ethylene glycol futures, industrial chain funds and institutional investment funds are involved, so as to better play the function of futures price discovery, Intermediate traders and polyester consumer enterprises can also better hedge their own risk exposure.
Everything is ready, and glycol futures enter the market “ count down ”
It is understood that the conditions for the listing of ethylene glycol varieties are ripe, and enterprises are actively learning the trading rules and preparing for transactions. In recent years, the number and volume of the whole upstream and downstream enterprises have increased to a large extent. By the end of October 2018, there were nearly 40 ethylene glycol production enterprises in China, of which more than 10 have increased in the past three years. There are hundreds of downstream polyester consumer enterprises, and the apparent consumption is close to 16 million tons, an increase of nearly 25% over 2015. The increasingly large industrial market scale will play a stabilizing role for the listing of ethylene glycol futures.
Although glycol futures have not yet been listed, polyester enterprises are not unfamiliar with the futures market. "Our company has participated in PTA futures trading, with the main purpose of inventory management. For example, in the second and third quarters of this year, due to the good downstream demand of polyester, the high production load of the factory, and the PTA enterprise carried out substantial maintenance and reduced supply, worried that the price of PTA would continue to rise in the later period, so they bought hedging on futures to avoid the rising cost of the gap caused by the sharp rise in price. " Relevant person in charge of Hengyi Petrochemical Company pointed out that.
As for how to carry out hedging business, he also mentioned that the company has formulated clear systems and operating procedures to ensure that the more successful the futures hedging is, the more chances it will have to achieve trading results better than the market average. "For ethylene glycol futures, we will first have a deep understanding of ethylene glycol contracts, trading rules, deliverables, delivery systems, quality standards, etc., and then conduct price management and hedging according to the performance of the varieties after listing and the inventory of the factory," said the person in charge.
Editor in charge: Zhang Yao
