On the polyethylene (LLDPE) futures and spot

Abstract: Polyethylene (LLDPE futures increasing influence on the spot, futures trading will become the mainstream model of polyethylene.

Abstract: Polyethylene has more and more influence to futures, futures trading surely will become one of the mainstream models in polyethylene business.

Keywords:: polyethylene (LLDPE, futures, spot
Keywords:: polyethylene, futures, spot goods
Since 2007 polyethylene (LLDPE futures market has been the rapid development, mainly because China is the world's largest consumer of polyethylene. Huge demand for polyethylene futures spot formation and development of an important basis for the development of the futures market Spot transactions and gave guidance.

Currently, the domestic polyethylene (LLDPE marketing mainly spot trading, only a small amount is carried out through the future delivery, but there are some drawbacks spot trading, mainly in the following five areas:
(1 production, marketing, at the monopoly. Since polyethylene large capital investment, technology, high safety requirements, the upstream industry chain length and other factors, the large state-owned enterprises in monopoly industries, the downstream users the right to speak in terms of pricing small. (2 messages wrong. because of monopoly elements, a lot of information to grasp the big wholesalers, large factory hands. small disadvantaged position of the user can not correctly grasp the procurement opportunity to share part of profits to be middlemen. (3 unstable supply of raw materials. As sudden change in orders and a lack of market resources, there will not be procured raw materials situation, affecting production and credibility. (4 spot trading high hidden costs. Since there are a lot of spot trading man-made factors, the responsible person is difficult to eleven tracking, making every aspect of the formation of the hidden costs of stock trading. (5 spot trading complex. spot trading takes a lot of effort to collect information, agreed price, difficult to change once the contract is not conducive to the factory to adjust production plans at any time.

Through this platform futures polyethylene (LLDPE transaction can solve the above problem. Therefore, the futures will be polyethylene (LLDPE trading one of the main mode, which is mainly polyethylene (LLDPE futures determined by the following six advantages :
(1 to ensure raw material supply. In the form of futures contracts, procurement, supply of raw materials can be protected to avoid the lack of social resources, raw material supply disruptions occur. (2 cost savings. Futures prices are reported online, simply lock in prices to sell, saving labor costs and other hidden costs. (3 to achieve production and demand balance. futures in a production cycle before the start of the buyer and seller under the futures price on the expected future supply and demand of goods, guidance polyethylene (LLDPE production and demand, play a stabilizing The role of supply and demand. (4 information sharing. Polyethylene (LLDPE futures market traders from all sides to bring a lot of demand and supply of information, standardization of contracts for sale and increased market liquidity, the price of the futures market to form a true reflection of supply and demand situation. (5 to promote rational allocation of profits. In polyethylene (LLDPE futures market, the upstream and downstream demand for raw materials producers through direct sale of enterprises, reducing the profit share of intermediate links, so that profits can flow between the business entities, conducive to the stable development of economy and industry. (6 to avoid price risk. Since the intervention of speculators and futures contracts of multiple transfers, so that buyers and sellers should bear the price risk be dispersed to a number of traders involved in the transaction body, reducing the price magnitude of change, and each trader risk.

However, in practice futures investment function is over-amplified, artificial hype factor is strong. Polyethylene (LLDPE futures prices fluctuated wildly, to the spot price of enormous imagination, leading to the spot price rises and falls of polyethylene. This the upstream and downstream production are in a highly unstable state, output, profits can not be stabilized, the entire industry is facing a great risk. to give full play to polyethylene (LLDPE futures advantages, we must be perfect from the following four areas:
(1 enhance their participation. Enterprises to participate in the low rate is polyethylene (LLDPE futures price volatility of the main factors. Table 1 is 1-8 months of 2009, polyethylene (LLDPE futures in the total number, legal households, corporate users ratio. can be seen from the data the number of speculative 98.6% household participation, corporate users participate in only 1.3% -1.6%, corporate participation is low. reposted elsewhere in the Research Papers Download http://www.hi138. com
(2 improve the delivery quantity. Table 2 is the delivery volume from January to August 2009, the number of (hand, hand to five tons. Total 3745 hand, 18,725 tons. And in the meantime, the domestic polyethylene (LLDPE production of 1.56 million tons, imports 1.46 million tons, the total volume of 3.02 million tons, the delivery volume of spot transactions accounted for only 0.62%.

(3 to increase the number of delivery library. Delivery rate is one of the main factors the Treasury less delivery. Domestically available polyethylene delivery Treasury 11, Tianjin 3, Green Island 1, Shanghai 3, Zhejiang 2, Guangzhou, 2, northeast, northwest, southwest, central bank had no delivery, largely restricted the delivery number. Therefore, we must increase the number of delivery database, to achieve the delivery of each prefecture-level cities have the Treasury.

(4 to improve the degree of product homogeneity. Product quality is the impact of future delivery of another major factor. As technical differences in various enterprises, the production of polyethylene (LLDPE quality is different, usually better than the domestic import, the new device is better than the old unit , the product price difference between 100-500 yuan / ton, also affected by customer preferences, some customers love the independence of a company's products. Therefore, the need for enterprises to improve technology, improve product quality, reduce the degree of product differentiation.

Polyethylene (LLDPE futures the most important role should be to stabilize the market supply and demand and prices, stable development of the industry, stable economic order. Upstream large petrochemical enterprises should be futures contracts as a means of trading, when the futures price is high, cash preservation, downstream plastic products companies should purchase futures contracts as a way of buying in the futures price is low, lower production costs.

Although polyethylene (LLDPE futures market still needs further improvement, but as the popularity of futures knowledge, management changes and technological progress, the advantage will play a greater extent. Therefore, polyethylene (LLDPE futures will become one of the main mode of PE transactions.

References:
[1] LLDPE futures contracts and rules Introduction [Z].

[2] China Petrochemical production process and processing applications [Z].

[3] Futures cash preservation and enterprise risk management [Z].

[4] CHICAGO [Z].

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