The chemical fiber industry is a bit difficult this year.
Data from the National Bureau of Statistics show that in the first half of this year, my country’s chemical fiber output was 33.67 million tons, achieving a slight positive growth year-on-year; total profits were 16.4 billion yuan, a year-on-year decrease of 51.16%.
Faced with such a market environment, how can physical polyester companies make good use of financial tools to manage business risks, product price fluctuations and inventory? What issues should companies pay attention to when using PTA futures and short fiber futures? In terms of serving the real industry and building a risk management tool system for the polyester industry chain, what will the Zhengzhou Commodity Exchange (hereinafter referred to as “Zhengzhou Commodity Exchange”) do next?
Assess the situation and participate in hedging
This year, international crude oil prices have generally remained high and fluctuated significantly. In early March and early June, the price of WTI crude oil exceeded US$120/barrel twice; it fell to US$106/barrel at the end of June and to US$83.94/barrel in September.
Statistics from China Fiber Network show that in the first half of the year, the fundamentals of the polyester staple fiber market were overall weak. During this period, short fiber factories even experienced negative cash flow. In July, the polyester staple fiber market continued to trend downward, with poor demand and obvious price declines; in August, the market continued its downward trend, with the average monthly price of products in that month being 8,014 yuan/ton, down 727 yuan/ton from June. From March to August, the production load rates of the polyester staple fiber industry were 78.9%, 66.5%, 67.2%, 72.2%, 78.8%, and 76.7% respectively.
Fujian Jinlun High Fiber Co., Ltd. (hereinafter referred to as “Jinlun High Fiber”) has an annual output of 450,000 tons of polyester staple fiber and 450,000 tons of polyester filament. Lin Fengshou, deputy general manager of the company, said: “In this case, companies are generally very conflicted. Because the finished products cannot be sold, and a pile of inventory is placed in the warehouse, what should I do? At this time, polyester companies are in the futures market. Hedging becomes a good choice. For example, a polyester company has a certain amount of PTA inventory. When the PTA futures price rises to a suitable price, the company can sell these stocks for hedging. Of course, in this process, the company needs to consider inventory costs to ensure the overall effectiveness of the hedging.”
It is understood that Jinlun High Fiber applied to become the PTA futures delivery warehouse designated by Zhengzhou Commercial Exchange in August 2017, which is the first time in Fujian Province A PTA futures delivery warehouse; registered as a short fiber delivery factory designated by Zhengzhou Commercial Exchange in September 2020. At the end of February and early March this year, Jinlun High Fiber conducted hedging in the futures market to reduce the company’s inventory pressure.
Lin Fengshou said that at the end of February, taking into account the current price difference and the company’s inventory, the company sold part of its PTA raw material inventory in the futures market, forming a partial profit. “We were mentally prepared at that time. If the price of finished polyester products rises in the future, the price of our inventory of finished products will also rise, which is a good thing for the company. For a period of time since then, the company’s finished product sales have been acceptable and inventory has decreased. . On March 11, the price of raw materials fell back, and the company’s books were still profitable. But at this time, we re-examined the market situation and believed that the company would not necessarily deliver the goods in the future, so we chose to close the position of the raw materials in the futures market. Profit.”
Statistics from the Zhengzhou Commodity Exchange show that from January to July this year, the average daily trading volume of PTA futures was 2.12 million lots, and the average daily position was 2.26 million lots; legal person customers The transaction ratio is 50%, and the position ratio is 82%; the PTA spot price correlation is as high as 0.99, and the cumulative delivery volume is 570,000 tons.
From January to July this year, the average daily trading volume of short fiber futures was 240,000 lots, and the average daily open position was 310,000 lots; legal person customers accounted for 54% of the transactions and 54% of the positions. is 83%, the futures and spot price correlation reaches 0.98, and the cumulative delivery volume is 60,000 tons.
Talking about the precautions for corporate hedging, Li Wenhuang, futures manager of the Polyester Industry Department of Xiamen Guomao Petrochemical Co., Ltd., said: “If companies want to make good use of hedging, they should focus on processing fees, Inventory management and risk management. Focusing on processing fees, companies should flexibly adjust hedging plans based on their own judgment on processing fees, combined with the macroeconomic situation and industry prospects and expectations. At the same time, companies should pay attention to the time and quantity of purchases. , direction, we must pay attention to controlling risks and margins, and make reasonable use of margin policies, such as registering goods held as warehouse receipts and pledging them to reduce capital occupation. In short, on the basis of achieving expectations and profit targets, enterprises should Hedging is hedging, and the processing fee is locked.”
Lin Fengshou also said: “Futures are a tool. If used well, it can stabilize corporate benefits. However, companies must note that when using futures, they must comprehensively consider the company’s financial strength and match the company’s own operating conditions. For example, when using futures, it must be based on the company’s monthly output, as well as previous finished product inventory and raw material inventory. , carry out corresponding matching.”
Multiple models to lock in profits
Whether it is PTA futures or short fiber futures , polyester companies have also formed a variety of models on the basis of hedging. Among them, the “basis spread” model has been widely used in the polyester industry this year.
The current annual production capacity of Xinfengming Group is 6.3 million tons of polyester filament, 600,000 tons of polyester staple fiber, and 5 million tons of PTA. This year, in the face of unpredictable market conditions, Xinfengming actively used basis price and other models to ensure production operations.
Zhang Sixi, assistant to the president of Xinfengming Group, said that in July this year, domestic polyesterThe factory has reduced its load and production, which has increased the inventory pressure on PTA factories. Faced with this situation, Xinfengming implemented “price sales” of a certain amount of PTA in the futures market after lowering the operating load.
On average, Xinfengming completed the price point at 5,900 yuan/ton (+350 yuan). Compared with the daily average spot price of 5,750 yuan/ton on the date of contract signing, this price has increased by 500 yuan/ton; compared with the average monthly spot price of 6,170 yuan/ton, this price has increased by 80 yuan/ton.
“For the buyer, by buying hedging in the futures market in advance, the risk of PTA price rise is avoided. For Xinfengming, by locking the basis difference, it can be implemented when the futures market price rises. This enables batch pricing and reduces the pressure on raw material inventory.” Zhang Sixi said.
Li Wenhuang also introduced: “After the listing of short fiber futures, the industry has added a new ‘basis price’ pricing model, including front-point prices and back-point prices. In recent years, basis trade has played an important role in polyester staple fiber The industry has gradually become popular.”
In addition to “basis spread”, polyester companies can also use futures tools to establish virtual inventory.
Lin Fengshou said: “Polyester companies can purchase PTA raw materials in the forward market, but these goods do not need to be sent to the factory, thus forming a virtual PTA inventory. By establishing a virtual inventory , which can save the capital costs of polyester companies.”
At the same time, using multiple futures tools in the polyester industry chain, polyester companies can also conduct “virtual factory arbitrage” to form raw materials and polyester companies. Arbitrage of price differences between finished ester products.
Lin Fengshou introduced that the main raw materials for the production of polyester products are PTA and ethylene glycol. When the total raw material cost of PTA and ethylene glycol is 5,000 yuan/ton, the cost of the produced polyester staple fiber is about 6,000 yuan/ton, and a certain processing cost needs to be added. Usually the processing cost of 1,000 yuan/ton is equivalent to 1,000 yuan/ton. For ester enterprises, it is a capital-guaranteed operation. After taking these costs into consideration, when do companies engage in forward arbitrage?
“When short fiber futures show high profits, companies can buy in the PTA futures market and sell on short fiber futures to achieve a price difference of 1,500 yuan/ton-2,000 yuan/ton. , thereby realizing arbitrage in virtual factories. Of course, we must realize that it will take a certain amount of time for high profits to return to value in the futures market, which may be one month or half a year.” Lin Fengshou said.
On the contrary, if the profit of polyester finished products suffers a loss, the company can conduct reverse arbitrage in the futures market.
“When the actual production of the short fiber factory suffers a loss, the company can reduce the production load of the physical factory, sell PTA raw materials in the futures market, buy short fiber, and achieve reverse arbitrage. From the actual situation Look, as long as corporate production returns to normal profit levels, arbitrage in the futures market will be profitable,” Lin Fengshou said.
Li Wenhuang introduced: “Enterprises can lock in profits by using PTA, ethylene glycol and short fiber futures varieties, build virtual factories in the futures market according to changes in processing intervals, lock in processing profits, and use short fiber futures to carry out operations. Cross-month hedging and virtual inventory management. If the market is high and then low, that is, the price in the near month is more expensive and the price in the far month is cheaper, on the basis of ensuring normal production, the company can use the excess short fiber inventory as Sell in spot form, or sell the near-month contract, and buy the same goods in the far-month contract, so as to flexibly manage inventory, revitalize funds, and earn the difference between the current and contract prices. However, companies should pay attention to controlling futures accounts Risk; if it is far away from the futures warehouse, you must also pay attention to ensuring the safety inventory of production, and pay attention to the warehouse receipt brand and the address of the warehouse. Overall, polyester factories are currently switching between different futures varieties more smoothly.”
Keywords:
National Bureau of Statistics Long-term benefit lock-in
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