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With PVC futures officially listed in May of this year, chlor-alkali chemicals grabbed the first order to sell. Some chlor-alkali enterprises stated that in 2009 China's chlor-alkali chemical industry was subject to the dual challenges of economic weakness and depressed downstream demand. The purpose of corporate hedging was to make full use of the same principle of both the futures market and the spot market, using the time difference between futures contracts and spot business formation. The hedging mechanism to avoid and reduce the risk of production and operation caused by large price fluctuations. The hedging function of the futures market allows them to reduce the adverse effects of major raw materials and PVC products due to price fluctuations. Some companies also indicated that they would first open a hedging policy at a futures company recommended by the company, and then apply for a hedging for a non-broker member of the DCE after the time is ripe. Currently, the chloro-alkali enterprises can be seen behind the large market in the domestic futures market. They began to use this as an effective means of inventory management and adjustment of inventory.
The reporter learned from Dashang that there are many spot companies that directly use the futures market as a purchase or sales channel to seize opportunities for arbitrage. There are also many spot companies that participate in futures markets as investments. Some companies stated that hedging avoids the risk of exposure from unilateral buying and selling of the company's stock, and uses the futures market to lock in profits, ensuring that the company's unfavorable conditions in the face of the financial crisis will continue to grow steadily.
Futures industry experts have analyzed the trends of enthusiasm for the hedging of chlor-alkali chemicals, and believe that the current hedging requirements of large and medium-sized state-owned enterprises still occupy a prominent position, but more and more private enterprises and SMEs are joining the futures market. From immature to relatively mature, from a small amount of participation to gradually enlarge the scale, from a single set of protection to a variety of forms, petrochemical companies have become an important force in China's futures market. It is expected that the overall size of the futures market will multiply exponentially in the next two to three years.
The reporter recently learned from the Dashang Group that despite the global market's cautious attitude towards the derivatives business after the financial crisis, the domestic chlor-alkali chemical hedging enthusiasm continued to heat up. Many companies have a keen interest in participating in the delivery of the relevant products of the Dashang Group and intend to actively apply for becoming a delivery warehouse for related products.