Since PTA futures was listed on December 18, 2006, after more than ten years of development and cultivation, the market has operated stably, and its price discovery and hedging functions have been effectively performed. It has become one of the most mature varieties in the futures market. The launch of PTA options at the end of 2019 has established a comprehensive and multi-level hedging system for upstream and downstream enterprises in the industry chain.
PTA futures have become spot industry pricing Core
PTA is a chemical product based on petroleum and is also the main raw material for chemical fiber. It connects the petrochemical industry and the textile industry, two important pillar industries of the national economy. my country’s PTA production capacity accounts for about half of the world’s, and its production and sales rank first in the world. Therefore, the listing of PTA futures is of great significance, and PTA futures is a unique futures product in my country and the first chemical product in China’s futures market.
Data show that since the listing of PTA futures in 2006, the volume of transactions and positions has continued to grow steadily. In 2019, the cumulative trading volume of PTA futures was 312 million lots, accounting for 7.9% of the national futures market share, making it the second largest variety in terms of trading volume in the country. At the same time, the participation structure of the PTA futures market is also becoming increasingly improved. At present, more than 90% of PTA production companies, trading companies and more than 80% of polyester companies are using PTA futures, and the proportion of corporate customer positions has reached 59%.
The active participation of industrial customers has promoted the integrated development of PTA futures and spot markets, laying the foundation for the stable and healthy development of PTA futures services in the domestic real industry. The active trading of PTA futures also creates conditions for the effective performance of price discovery and hedging functions.
Since its listing, PTA futures and spot prices have been highly correlated in terms of trend and rise and fall. The correlation coefficient has been above 0.9 for a long time, and it was as high as 0.996 in the first half of 2020. One of the varieties with the highest correlation between futures and spot prices in the futures market. PTA futures prices can accurately, comprehensively and truly reflect supply and demand conditions and their changing trends, providing an effective reference for the production and operation of relevant spot companies.
Market participants believe that PTA futures prices have become a core factor in industrial pricing due to their openness and authoritativeness. Before 2010, domestic PTA production capacity was mainly concentrated in a few state-owned petrochemical enterprises, and their advocacy price and monthly settlement price were the main pricing basis in the spot market. After 2010, private PTA companies expanded rapidly, and currently private companies account for more than 90% of PTA production capacity. Since private enterprises have more flexible mechanisms in using the futures market, a price trading model of “futures price + premium and discount” appeared in PTA spot trade around 2011. Since then, spot trade with futures prices as the core has gradually increased.
At present, the PTA spot market price consists of two parts. One part is the price during free trade in the spot market, which is basically priced according to the “futures price + premium and discount” method. According to statistics from Hangzhou Zhongpu, the largest PTA spot matching company in China, 95% of PTAs in the current spot market use futures pricing.
The other part is the monthly settlement price announced by PTA manufacturers at the end of each month, which is used for the monthly settlement of annual contract orders signed by large production groups such as Yisheng Petrochemical and Hengli Petrochemical with downstream companies. For settlement, the monthly settlement price is based on the average spot price of the month, and the spot price is mainly determined based on the futures price, so the monthly settlement price still mainly refers to the futures price. Generally speaking, the current pricing mechanism of the PTA industry takes futures prices as the core, and PTA futures prices serve as the spot market pricing benchmark, which greatly improves the industry’s pricing efficiency.
The dual-effect protection market function of futures and options can be fully exerted
In order to To better serve enterprises in the PTA industry chain, Zhengzhou Commercial Exchange listed PTA options on December 16, 2019. “The listing and trading of PTA options can complement the advantages of related futures varieties, better meet the personalized and diverse risk management needs of entity enterprises, and also help promote the high-quality development of the upstream and downstream of my country’s PTA industry chain.” Zhengzhou Commodity Exchange The relevant person in charge said.
Especially since last year, due to changes in crude oil prices and exchange rates and changes in the industrial chain structure, the prices of PTA and other products have fluctuated greatly, and the uncertainty and uncertainty in the production and operation of physical enterprises have Complexity is further enhanced. Li Bin, vice president of the China Petroleum and Chemical Industry Federation, once said: “Carrying out PTA options trading can build an all-round and multi-level risk hedging system for industrial chain companies, which will help enhance the industry’s ability to resist risks and develop resilience, and help the chemical industry. The industry develops with high quality.”
This is exactly the fact. As the first domestic chemical industry to achieve full coverage of futures and options, domestic and overseas, on-site and off-site, the futures and spot prices are highly consistent. Variety, the PTA futures market gave full play to its price discovery and other functions during this year’s COVID-19 epidemic, especially during the resumption of work and production.
According to the reporter’s understanding, during the epidemic, polyester industry chain companies that used futures for hedging basically solved the problems on the sales side and also effectively resolved the risk of high inventory. . Many companies use derivatives for risk management, effectively solving risks such as inventory accumulation, rising costs, and basis fluctuations through strategies such as selling hedging, processing fee hedging, and arbitrage. In the international derivatives market, options and futures are also important basic derivatives, playing an irreplaceable role in helping industrial enterprises discover prices and mitigate risks.
At this stage, the polyester industry is very familiar with and utilizes PTA futures, and the PTA options that have been launched are also very high.��Polyester industry chain companies have brought more room for exploration.
The listing of PTA options provides entity enterprises with a more flexible way to avoid risks. Adding options to optimize the hedging effect has become a focus of entity enterprises.
“After the Spring Festival, under the influence of the epidemic and the plunge in crude oil prices, the price of the main PTA futures contract continued to fall from around 5,000 yuan/ton at the beginning of the year. For those who have used futures short hedging, Enterprises, at this time, the futures side has generated good floating profits, but due to the unknown market outlook, the futures floating profits cannot be cashed out, and they can only continue to hold them until the end of the period.” Shen Zhuofei, an analyst at SDIC Essence Futures, said that in this case , when the implied volatility of options is not high, companies can replace short futures positions with bought put options and cash in futures hedging profits. If PTA futures prices fall further in the market outlook, PTA options can also achieve a hedging effect. However, if the price rebounds, the loss of buying options will be limited, and companies do not need to worry about margin calls.
The reporter learned that it is precisely because the upstream PTA companies protect the value of PTA by buying raw material PX and buying put options on PTA, and the downstream polyester companies buy call options and other methods Locking in raw material costs allowed polyester industry chain companies to achieve more effective and stable operations during the epidemic. In order to meet the hedging needs of PTA upstream and downstream enterprises and enrich the futures variety sequence of the industrial chain, Zhengzhou Commodity Exchange is actively promoting the research and development and listing of short fiber, bottle flakes and PX futures. The listing of relevant varieties will help industrial enterprises achieve full hedging coverage and increase risks. The management effect helps the domestic polyester industry to operate stably. </p
