Introduction: Recently, the China Petroleum and Chemical Industry Federation hosted the 2017 Petrochemical Industry Development Conference in Dalian. At the meeting, Jiang Wei, Director of the Industrial Development Department of Dalian Commodity Exchange, once again spoke out about the ethylene glycol futures that had been silent for many days. He said that Dashang Commodity Exchange The institute will research and develop new varieties such as ethylene glycol, strive to achieve full product coverage in the industrial chain, and provide chemical companies with more hedging tools.
Regarding the explanation of the Dalian Commodity Exchange on listing ethylene glycol futures, this is the third time since the China Securities Regulatory Commission approved the project application for ethylene glycol futures on October 16 last year. Regarding ethylene glycol futures, the regulators have been planning it for many years. Since the approval and announcement of the draft contract last year, it has gradually come to an end. However, when the incident is approaching its end, half a year has passed. Regarding The matter is still unclear. The futures listing, which has been brewing for a long time, is still difficult to make a decision in the end! I can’t help but ask, what are you worried about when it comes to ethylene glycol futures?
The “realistic reflection” brought about by whether to go to the futures market: an important “watershed” for the ethylene glycol market
After October 2016, the news that ethylene glycol was listed on the Dalian Commodity Futures Exchange suddenly came like a spring breeze. On November 16, 2016, the Dalian Commodity Exchange announced that the China Securities Regulatory Commission had approved the listing of ethylene glycol futures on the Dalian Commodity Exchange. As for the project application, with the news of the approval of the ethylene glycol futures project, the market rose by 1.92% in a single day on Friday that week. Affected by the news, the overall market turned from sluggish to optimistic. On December 4, at the 12th China 2016 At the “Dalian Commodity Exchange Special Event” of the (Shenzhen) International Futures Conference, the ethylene glycol futures contract and draft rules debuted on the market. On the 5th of that month, the opening of the ethylene glycol center of gravity rose sharply by 3.4% and continued to rise widely, exceeding 7,000 in one fell swoop. yuan/ton mark. Subsequently, ethylene glycol experienced a vertical rise after November like crazy. It can be said that the series of actions triggered by the listing of ethylene glycol futures can be said to be the main driving force for the surge.
However, shortly after the announcement of the listing on the futures market, eight major domestic polyester manufacturers jointly submitted a letter opposing the listing of ethylene glycol on the futures market, claiming that ethylene glycol did not meet the mature conditions for listing, and applied to the China Securities Regulatory Commission to delay the listing. It is precisely because these eight leading polyester companies jointly opposed and mainstream factories were worried about abandoning it that market confidence was severely damaged! After that, the ethylene glycol futures gradually faded out of everyone’s sight. The internal price of ethylene glycol plummeted from the peak of more than 8,300 yuan/ton to the current 5,720 yuan/ton, a drop of more than 31%. It can be said that it returned to liberation overnight. forward.
What are polyester companies worried about when it comes to ethylene glycol futures?
It is understood that half of the world’s ethylene glycol (about 90% of China’s ethylene glycol) is used in China’s polyester production. In China, 85% of polyester is used in the chemical fiber industry to produce polyester fiber. As the most important product in chemical fiber, polyester has basically grown year-on-year with China’s GDP. The Jiangsu and Zhejiang regions are densely populated with chemical fiber companies. Large chemical fiber companies such as Hengyi and Rongsheng are located here, so a large amount of ethylene glycol is needed to meet the production of polyester fiber. On the other hand, the import volume of ethylene glycol in 2015 was 8.77 million tons, with an import dependence of about 69%. So why are the opposition voices from leading polyester companies so firm? What are they worried about?
1. Ethylene glycol downstream enterprises are accustomed to using petroleum route products, and the quality of coal-based ethylene glycol products has not been very certain in recent years. At present, polyester companies have blending phenomena in the actual use of coal to produce ethylene glycol, and the current blending ratio is generally 20 to 30%. Once it becomes DCE futures, polyester manufacturers are worried that traders will mix it up with more coal-based ethylene glycol.
2. As can be seen from the above, since the news that ethylene glycol futures will be launched soon, many domestic suppliers have begun to stock up in large quantities, and foreign suppliers have also successively increased their inventories, reducing market supply and driving up prices. A surge occurred, encouraging speculation. For physical enterprises, rising raw material prices will inevitably increase corporate costs and put greater pressure on the good operation of the enterprise.
3. Another point to consider is the production capacity of ethylene glycol. In the past few years, there has been a rush to launch coal-to-ethylene glycol projects, resulting in a lack of unified planning and disorderly competition, resulting in a lack of dominance in cost advantages and quality processes. situation has entered a trough period. Once listed, the production capacity of ethylene glycol projects, especially coal-based ethylene glycol, will continue to expand. It is understood that by 2020, China will have completed a total of 41 coal-to-ethylene glycol projects with a total production capacity of 10.26 million tons. Although China needs to import a large amount of ethylene glycol, it already has overcapacity from a global perspective.
In general, the concerns above polyester factories are understandable, and it is also reasonable to ask the China Securities Regulatory Commission to suspend the listing process of ethylene glycol futures. Of course, if the above concerns can be resolved, considering factors such as the huge consumption of ethylene glycol, high dependence on foreign countries, and frequent price fluctuations, if ethylene glycol futures can be successfully listed, it will effectively ease the operations of polyester and ethylene glycol production companies. risk. Now the leadership of Dalian Commodity ExchangeThe statement did not mention the time when ethylene glycol will be launched, but continued to research and develop new varieties such as ethylene glycol. The article also mentioned that the transaction and delivery system must be continued to improve and continuously adapt to changes in the spot market to facilitate smooth delivery for companies. In fact, it also shows that the China Securities Regulatory Commission recognizes certain situations in the joint petition of polyester companies, and may be making some adjustments.
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