PTA Futures Ushered In The 15Th Anniversary Of Listing, What Has Changed

You are wearing a warm and windproof suit, a cup of sweet and warm milk tea cup in your hand, a pair of comfortable and comfortable sports shoes on your feet... You may not even imagine that they may use an upstream raw material, PTA.

As an important textile material, PTA is closely related to the daily life of the public.

On December 18, PTA futures ushered in the 15th anniversary of listing. In the past 15 years, along with the rapid development of China's PTA industry, PTA futures and industry integration symbiosis.

In the past 15 years, China's PTA self-sufficiency rate has increased from less than 50% to 100%. With the great development of polyester industry, the dependence of raw materials on foreign countries has been gradually reduced, the competitiveness of polyester industry chain has been significantly enhanced, and the development degree of "integration" has been deepened.

In the past 15 years, PTA futures has been steadily mature in the process of optimization and upgrading of service industry and steady operation of enterprises.

"PTA futures price is not only the pricing benchmark for China's PTA spot trade, but also gradually becomes an important pricing reference for international trade of upstream and downstream products." Zhejiang a large chemical fiber enterprise in charge of the reporter said so.

The correlation coefficient of PTA is as high as 0.99 in the whole year

PTA futures was listed on Zhengzhou Commodity Exchange (hereinafter referred to as "Zhengzhou Stock Exchange") on December 18, 2006, which is the first chemical product in China's futures market and also a unique futures variety in the world.
After 15 years of careful cultivation, PTA futures market has steadily expanded the trading scale and good price discovery function, which has been deeply integrated with the development of China's polyester industry. In the functional evaluation of futures products organized by China Securities Regulatory Commission, PTA futures has been ranked first in chemical products and industrial products in China for many years.
The closer the value to "1", the more consistent the price trend is.
It can be said that PTA futures price accurately, comprehensively and truly reflects the industry supply and demand situation and change trend.
On the one hand, PTA futures can guide the production and operation activities of polyester industry chain enterprises, on the other hand, it also provides favorable conditions for enterprises to carry out hedging and other operations through the futures market.
According to statistics, there are about 20 PTA manufacturers in China, of which 16 have participated in PTA futures trading, and their total capacity accounts for 93.59% of the total PTA production capacity in China. Among the top 20 polyester enterprises, 18 have participated in PTA futures trading, and their total production capacity accounts for 67.47% of the total production capacity of polyester in China.
From the actual situation of the market, PTA futures delivery layout also presents a significant feature of highly coordinated matching with the industrial supply and demand pattern.
From the upstream supply side, there are 9 PTA futures delivery warehouses such as Lingang logistics and Ningbo Yisheng PTA futures delivery factory warehouse in Qiantang Jiangkou area, where polyester production capacity accounts for about 40% of the total polyester production capacity in China.
From the downstream demand side, all 20 PTA delivery warehouses are located in Jiangsu, Fujian and Zhejiang provinces, which concentrate 84% of the national polyester staple fiber production capacity.
The person in charge of a large polyester enterprise introduced: "PTA warehouse receipt is a general warehouse receipt. Holding warehouse receipt can pick up goods in any delivery warehouse with warehouse receipt. Compared with traditional spot purchase, warehouse receipt mode can save logistics cost, effectively promote trade radius and market circulation circle from regional market to the whole country, so as to improve the efficiency of spot trade and circulation."
Hengli petrochemical, Hengyi petrochemical and Yisheng Petrochemical are all large-scale chemical fiber enterprises which have established strong international competitive advantages. Over the years, they have actively participated in PTA futures market, carried out hedging and other operations, and comprehensively managed business risks.
Hengyi Petrochemical said that the hedging investment business carried out by the company for the purpose of hedging is closely related to the company's daily business needs, strengthening risk management and control, and improving the company's ability to resist market risks.
Another person in charge of a polyester enterprise told reporters that the market transparency of polyester industry chain futures varieties is large, and transactions are active, and the transaction price and settlement price can fully reflect the fair value of derivatives. By carrying out the hedging business of PTA and other futures varieties, the company can make full use of the hedging function of the futures market, better avoid the risk caused by the price fluctuation of raw materials and products, and reduce the impact on the production and operation of the company.

"PTA current price is highly related, which is due to the deep participation of enterprises in the industrial chain." The relevant person in charge of Zheng Shang said so.

Change the pricing mode of domestic and foreign industrial chain trade
In the past 15 years, PTA futures has profoundly changed the traditional trade form of China's polyester industry, changed the trade pricing mode of upstream and downstream of the industrial chain, and effectively improved the pricing efficiency and risk management level.

Before PTA futures listing, PTA pricing was dominated by several large PTA manufacturers in China. According to the spot transaction situation, the enterprises announced the settlement price of contract goods at the end of the month, and then announced the listing price of contract goods for the next month. At present, PTA spot market price mainly consists of two parts.
One is free trade prices in the spot market. Statistics from relevant institutions show that at present, 95% of PTA spot trade is priced according to the basis trade mode of "PTA futures price + promotion discount".

The other part is the monthly settlement price of PTA production enterprises, which is used for the monthly settlement of annual contract goods signed between large production groups and downstream. According to reports, the monthly settlement price is usually referred to the PTA spot market average price, so it is still mainly affected by the futures price.

In the past 15 years, China's PTA industry has experienced many cyclical market quotations in the process of becoming bigger and stronger. For industrial enterprises, after the periodic market test and experience, they more and more tasted the sweetness of the effective use of futures tools, also more and more inseparable from PTA futures.

It is particularly worth pointing out that PTA futures has created a differentiated competitive advantage for the operation of polyester industry chain, whether the industry is faced with periodic and structural overcapacity before and after 2014, or when the industry is facing the impact of new crown pneumonia epidemic and extreme market since 2020.

In 2014, China's PTA capacity appeared periodic and structural surplus. "At that stage, in order to gain more market share, spot producers competed to reduce prices. In order to find a better way to make profits, the application of futures hedging and basis trading gradually became popular in PTA industry."

According to reports, compared with the previous "buy it now" transaction, basis trade turns the originally antagonistic buyer and seller into a win-win relationship, reducing negotiation costs and improving transaction efficiency.

At the beginning of 2020, in the key period of prevention and control of new crown pneumonia, like other industries, affected by the low downstream operating rate and poor logistics, PTA social inventory is high. In this context, Yisheng petrochemical and other production enterprises use basis trade, futures delivery and other means to sell goods in stock, recover funds, and maintain a reasonable level of inventory. In 2021, the integrated business platform of Zhengshang exchange launched the basis trade linkage point price function to help both parties to improve the efficiency of basis trade and standardize the trading process.
It is also worth noting that PTA futures also gradually changed the international trade and pricing methods of polyester industry chain.

On November 30, 2018, PTA futures were officially introduced into overseas traders. After three years of opening up, more and more foreign industrial enterprises participate in and use PTA futures, such as BP, Glencore and mercuria.
From a global perspective, in recent years, PTA futures price has become an important reference factor in PX Asian contract price negotiation. Chinese enterprises began to more and more use PX price as the basis of price negotiation of PX international trade based on the backward price of PTA futures from Zhengshang Institute.
As China's polyester industry enterprises are more and more familiar with PTA futures, when they sign orders with foreign customers, they have gradually become accustomed to using PTA futures market to lock in part of the raw material cost, so as to further lock in part of the processing profits.
More importantly, PTA futures price has become an important price reference for domestic and foreign enterprises to sign annual order contracts for polyester bottle chips.
GSI is the largest supplier in Europe and has a long-term purchase contract with Chinese factories. According to the head of the company in China, since the second half of 2018, foreign customers mainly refer to PTA futures prices when negotiating purchase contracts with Chinese bottle chip factories.

In 2021, Hengli Petrochemical also wrote PTA futures price into the contract directly in the process of 2000 tons PTA basis trade with a polyester customer in Russia. "In the export trade, due to the following the same price benchmark, some adverse competition situations between Chinese peer enterprises are effectively avoided, and the pricing initiative of China's downstream PTA polyester enterprises is effectively enhanced." Hengli Petrochemical related person in charge said.
The reporter also learned from Zheng Shang that since the introduction of foreign traders in PTA futures, 428 overseas customers from 20 countries around the world, such as Singapore, the United Kingdom, Germany, Italy, New Zealand, South Korea and the United Arab Emirates, have opened accounts, and 49 overseas brokerage institutions have completed the filing.

Futures options help enterprises improve quality and efficiency

In the past 15 years, hedging and basis trade have been deeply embedded in the daily production and operation of upstream and downstream enterprises in polyester industry. After the listing of PTA options in 2019, based on its more flexible trading strategy and rich application scenarios, PTA options can be rapidly promoted and applied in the industry.
Looking at the upstream and downstream of polyester industry chain, PTA futures have been used to carry out risk management in the whole industry chain trade from PX procurement to polyester sales for many years.

In 2016, in order to avoid the risk of raw material price falling after signing the PX procurement contract, Yisheng petrochemical, a PTA producer, conducted reverse trading in PTA futures market in consideration of the strong price linkage between PTA and PX, effectively hedging the risk.

In 2017, the polyester manufacturer Jingwei new fiber short fiber products were oversold. In order to prevent the profit reduction of oversold products caused by PTA price rise, the enterprise reduced the risk of raw material price rise by buying PTA futures.
In the first half of 2020, PTA production enterprises represented by Hengli Petrochemical Co., Ltd., through basis trade and other means, used the futures market to sell PTA commodities through multiple channels, stagger peak to avoid low price, control production and sales balance, and achieved good results, avoiding possible price war in spot trading.
Before and after the Spring Festival in 2021, some polyester traders, based on their own purchase plan and Futures and spot price call expectations, bought call options to hedge the risk of PTA spot price rise, and comprehensively considered the cost, sold put options to obtain premium, which effectively made up for the loss of spot purchase.
Xiamen international trade has been actively involved in PTA futures delivery, and is the main force of delivery in many contracts. Through delivery, Xiamen international trade can effectively adjust the location difference of PTA spot, save transportation costs, and under the condition of fixed monthly purchase quantity, disk delivery can better adjust the contradiction between seasonal demand and supply of polyester.
At the same time, PTA futures warehouse receipt effectively acts as the "reservoir" of the spot market. In addition, warehouse receipt financing function can effectively help enterprises optimize inventory management, reduce operating costs, and improve the effectiveness of business decisions.
Before PTA futures are listed, enterprises can only manage inventory by increasing or slowing down the purchase volume, the adjustment of inventory quantity is relatively lagging, and passively accept inventory depreciation loss when PTA price drops. After PTA futures are listed, enterprises have added new channels of purchase and sale. They can choose to sell inventory when the futures price rises, and establish virtual inventory when futures price discount to reduce inventory cost.
Based on the stable basis, the upstream and downstream enterprises in the industrial chain tend to turn social inventory into futures inventory, which exists in the form of PTA futures warehouse receipt, which makes the invisible inventory scattered in downstream factories or wharf warehouses gradually become apparent. Moreover, the industrial chain enterprises can timely and accurately grasp the PTA inventory situation and accurately study and judge the market according to the daily warehouse receipts and daily reports published by Zhengshang.
From December 2020 to February 2021, yishenghua, a PTA manufacturer of Yisheng petrochemical, registered 6247 futures warehouse receipts at PTA temporary inventory points, equivalent to 31200 tons of spot goods. Traders cooperating with Yisheng Petrochemical Co., Ltd. also registered and put into storage more than 30000 tons of PTA in the temporary inventory point.
The relevant person in charge of the enterprise said: "the use of the advantages of standard warehouse receipts of futures can facilitate the transfer and financing, ensure the continuous production of enterprises, effectively regulate the relationship between supply and demand of the industry, and promote the circulation of the industrial chain."
Generally speaking, the dominance of inventory also reduces the inventory cost of the industry. It is understood that before PTA futures listing, PTA inventory of polyester enterprises is generally in 15 ~ 20 days, but now it is reduced to 7 ~ 9 days, which greatly reduces the inventory cost of polyester enterprises.
It is also worth pointing out that based on the warehouse receipt trading business of the comprehensive business platform of the Zhengzhou stock exchange, PTA upstream and downstream enterprises can register PTA goods in the Zhengzhou stock exchange as standard warehouse receipts. The warehouse receipts can offset the futures trading margin, and can also be used as collateral to apply for loans to the bank to help enterprises alleviate the problem of capital shortage.
According to the data from Zhengzhou stock exchange, PTA will register 6045000 warehouse receipts in 2020, of which 135000 warehouse receipts will be used for warehouse receipt transactions, and the financing amount will reach 2.476 billion yuan. This makes the exploration to ease the financing difficulties and high financing problems further achieve results, and promote the sound operation of enterprises and the virtuous circle of industrial chain.
Zheng Shang Suo continues to serve the development of real industry

In the past 15 years, PTA futures have been developing and maturing all the way from a stumbling start to becoming a star variety in the futures market, which is also inseparable from the continuous efforts made by the Zheng Shang exchange.
Looking back on the development of PTA futures in the past 15 years, the relevant person in charge of the exchange said that in the work of variety cultivation, the exchange has always adhered to the following aspects of work.
One is to deeply cultivate industrial customers, close to the enterprise service industry. After PTA futures listing, Zheng Shang Institute focuses on how to better serve industrial enterprises. Through regular research, visits, participation in industry conferences, holding symposiums and other forms, the Institute has achieved full coverage of key enterprises; By closely tracking the spot market, timely and fully understanding the needs of industrial customers, timely modifying the rules and regulations, expanding the delivery brand and region, truly realizing "think what the enterprise thinks, rush the enterprise's urgency, and solve the enterprise's difficulties".
The second is to break through the barriers of delivery links to ensure smooth delivery. The design of PTA futures delivery rules closely fits the spot market, fully conforms to the logistics, warehousing and trading habits of the spot market, and does not set up rule barriers, so as to facilitate industrial enterprises to participate in the delivery. Especially in the special period such as the new pneumonia epidemic, spot trade is blocked. PTA futures delivery provides a new channel for upstream and downstream enterprises to buy and sell goods, effectively ensuring the continuous and stable production and operation of industrial enterprises.
Third, continuously enrich the varieties of industrial chain. In the textile industry chain, Zheng Shang exchange has listed PTA, cotton futures and options, staple fiber and cotton yarn futures varieties, and launched cotton cotton cotton yarn and PTA staple fiber cross variety arbitrage instruction, providing diversified risk management tool combination for polyester and textile industry chain upstream and downstream enterprises, and providing warehouse receipt financing and other supporting services.

　　 "In the next step, the SSE will strengthen the R & D of futures products such as Px, bottle chip and filament in the upstream and downstream of PTA, enrich the financial hedging tools of industrial chain enterprises, and help smooth the domestic circulation; further optimize the system and rules process, effectively connect with the international market rule system, and enhance the influence of PTA futures prices in domestic and foreign markets; it will continue to carry out industrial services and market cultivation, Support enterprises with risk management needs to use futures instruments to stabilize production and operation directly or indirectly, so as to help ensure supply and price stability. " Zheng Shangsuo said the above responsible person.