Plastic trading companies introduce ** to create competitive advantage

Since the beginning of this year, the price of China's plastics market has experienced another sharp drop since the 2008 financial crisis, with a drop of nearly 30%. This year, China's PE annual production capacity will exceed 10 million tons, and this will result in the rapid expansion of the scale of inventories. China's plastics production, trade and consumer companies are facing a huge price fluctuation risk. In this context, the need to maintain the value of the company to promote the value of plastics positions held by the DCE reached record highs, reaching a maximum of 226,000 hands.

In response to this change in the plastics market, the Shanghai Plastics Industry Association jointly with Shanghai Everbright has recently held the “2010 Shanghai Investment Opportunities Summit Forum” in Shanghai, inviting more than a decade of influential domestic, spot experts and East China 50 Leading companies in the plastics industry conducted an in-depth interpretation and analysis of hot spots in the current market, and gave detailed introductions on how companies can use market instruments to avoid market price risks. ** Daily reporters found that with the difficulty of spot sales, more and more spot traders began to pay attention to and participate in plastics in order to improve their own trading patterns.

The current price of plastics is highly correlated and the structure of market participants is constantly optimized

After years of development, China's plastics industry has ranked among the world's leading advanced countries in plastics. Industrial clusters have been optimized year by year, the overall advantages have been gradually improved, the number of national brands with independent intellectual property rights has increased, and the output of plastic synthetic resins and plastic products have ranked second in the world. .

"In recent years, affected by the drastic fluctuations in international oil prices and domestic coal prices, China's plastics production, trade, and consumer companies are facing great risks, and it is urgently necessary for the market to bring into play the functions of price discovery and risk aversion to provide stable operations for enterprises. The appropriate financial instruments. In order to meet this objective demand, DaChang has introduced LLDPE** and PVC**.” Liu Huajun, deputy general manager of Daishang, said in the speech delivered by the company that in 2009, the volume of plastics trading at the DCE The transaction volume was 126 million hands and 5.74 trillion yuan respectively, accounting for 15.05% and 15.24% of the total trade volume and transaction volume for the year. According to the data of the American Association of Ken Industry in 2009, Daisho has become the largest plastic in the world. **market.

"LLDPE and PVC** have been operating since the listing and related spot companies and investors have participated in the activity. They have successfully implemented the price discovery and hedging functions." Liu Huajun said that the correlation between the two major varieties and spot prices is above 0.8. , Has a good convergence, ** price effectively reflects the spot market price movements, can provide a reasonable reference for the company's production and consumption. At the same time, plastic ** attracted a large number of spot companies to participate in risk aversion, as of July 2010, there are more than 2,600 spot companies involved in the plastic ** safe-haven transactions, and achieved good results. With the development of the plastics market, the structure of participants has continued to be optimized. At present, the turnover of corporate customers accounts for about 20% of the total market turnover. The end of month positions are stable at about 50%, which is equivalent to mature varieties such as soybeans and corn. In addition, the development of plastics** has played a positive role in shaping the Chinese price of the international plastics market.

“The current international crude oil and related products are subject to fierce price fluctuations, and market instability is becoming more prominent. We hope that plastics companies in East China will further increase their research on plastics and use good tools to continue to grow bigger and stronger,” said Liu Huajun.

Plastic trading companies seek new models of trade under ** assistance

The forum attracted a lot of plastics companies to participate in, and some companies specifically came from Jiangsu and Zhejiang. According to Liu Jingfen, president of the Shanghai Plastics Industry Association, the plastics industry in East China has developed rapidly in recent years. In the first half of this year, the output of plastic resins and supplies was 9.611 million tons, polyvinyl chloride output was 1.265 million tons, and polyethylene resin was 2.196 million tons. Polypropylene was 1.866 million tons and polyester was 1.048 million tons, accounting for 45.6%, 22.9%, 43.9%, 41.3%, and 84% of the country's total output. Plastic processing machinery and equipment produced 84,700 sets, accounting for 55.2% of the country's total output. The output of various types of plastic products was 11.16 million tons, accounting for 43.3% of the country's total output.

** Daily reporter learned that in the current market environment, the traditional trade model is facing no small challenge. “Because spot sales are getting more and more difficult, the risks of traditional trade patterns are increasing. At the same time, the competition for pricing power by financial capital has caused traditional traders to find themselves confused in the face of market prices, and the traditional trade model of “low buy and high sell” has been broken. Zhu Mingyuan, manager of Xiangyu Industrial Services Department, pointed out in a sharp note the current dilemma faced by plastics companies.

For this problem, Yuanda Group effectively solved the problem through the proper use of **. The group’s plastics division Yu Tao introduced that ** has a significant role in the expansion of Yuanda Plastics’ business, and has played an active role in risk management and control, sales expansion, inventory management, perfect pricing methods, investment arbitrage, and provision of decision-making basis. Since 2008, ** has helped companies effectively resist the impact of the financial turmoil, and has enhanced the company's risk control capabilities and stable profitability in the context of the rapid expansion of business scale. The business average annual compound growth rate has reached 40% to 50%.

“In terms of risk management, the plastics import business usually has a period of one to two months, during which part of the goods have a price exposure risk. At this time, the risk can be hedged through selling ** contracts.” Yu Haitao said that risk management and control capabilities The promotion will enable Grand to dare to expand its trade volume. It will not only better serve the needs of end-users, increase the market share of end-users, but also maintain the channels of suppliers.

According to reports, in terms of inventory management, when there is a downside risk to PE prices, companies can hedge by selling ** contracts. If the spot is difficult to sell, inventory can also be registered as ** warehouse receipts for delivery. In addition, in the face of end-customer procurement requirements, companies can buy ** first, after the stock replenishment, and then close long positions. Through such operations, the company effectively met the needs of end customers, expanded its market share, and achieved stable profits.

“As the trade structure changes, the market becomes more transparent and the original trading model is difficult to survive. The future of scale, logistics and services will inevitably become the core competitiveness of trading companies. The global large-scale trade companies Cargill, Glencore and Dutch Toke Trade Instead of pursuing the profits of each ton of goods, enterprises are focusing on the efficiency of logistics and distribution and the scarcity of cargo resources.” Zhu Mingyuan stated that in the future, domestic traders will be divided into two groups, among which large-scale traders will increasingly pursue scale. The logistics and integration effects have begun to have their own logistics companies and warehouses, extending their reach to the entire industry chain; small traders will be forced to seek differentiated positioning and services. The rational use of ** will help plastics companies to operate smoothly and build their own comprehensive competitive advantage.