Paul M. Romer, a professor of economics at New York University's Stern School of Business, arrived in Zhengzhou, the central city of China, two days ago with his own traffic, a world-renowned economic cafe, a winner of the Nobel Prize in Economics in 2018, a leader in endogenous growth theory, and a professor of economics at New York University's Stern School of Business. For a time, his analysis of the global financial market and the world economic situation occupied an important position in China's major well-known financial and economic media and information platforms.
This is not the first time Paul Romer has come to Zhengzhou. Last September, he had fully perceived the unique charm of Zhengzhou, the Central Plains city, and the innovative vitality of China's remarkable economy and booming futures market. In fact, Paul Romer's appearance in Zhengzhou for two consecutive years is the annual event of the global futures industry - China (Zhengzhou) International Futures Forum.
The China (Zhengzhou) International Futures Forum was held in Zhengzhou International Convention and Exhibition Center from September 1 to 2, 2019. This forum is sponsored by Zhengzhou Municipal People's Government, Zhengzhou Commodity Exchange and CME Group. Its theme is "Reforming the New Situation, Opening up the New Step - Deepening Futures Supply Side Reform and Serving the High Quality Development of Economy".
On September 2, the PTA Futures Forum, one of the important sub-forums of the China (Zhengzhou) International Futures Forum, was held. The Forum provides a communication platform for domestic and foreign industrial chain enterprises, and attracts foreign production and trade enterprises such as BP, Italy GSI, Pakistan ICI and Jianengke, as well as leading enterprises in polyester and PTA industries in China.
Participants at home and abroad made in-depth discussions on the internationalization of PTA futures, spot trade cooperation of PTA, and how to further improve the futures sector of the polyester industry chain.
PTA futures: the international market is running well
PTA is the main material for polyester production, and polyester fibers and fabrics are one of the main materials for fashion.
PTA futures is the first chemical product in China's futures market, and also the first chemical product introduced to foreign traders.
More than 90% of PTA production and trading enterprises in China, and more than 80% of polyester enterprises are currently involved in PTA futures trading, with more than 65% of corporate customers holding positions. For many years, the correlation between PTA futures price and spot price in China is as high as 0.99. On November 30, 2018, Zhengzhou Merchants Exchange PTA futures began to introduce foreign traders.
At the meeting, Zheng Shangshi's responsible person said that PTA futures function has been playing well. In terms of price discovery, PTA futures price has become the pricing benchmark of spot trade. The trade price is generally determined by the model of futures price plus discount. For many years, the correlation of PTA spot price is over 0.90. In terms of risk aversion, the breadth and depth of industrial enterprises'participation in PTA futures are further increased. From January to August this year, 62% of PTA futures corporate customers held positions. Industrial chain enterprises use PTA futures tools to avoid risks in a flexible and diverse manner, such as point-to-price trading, warehouse receipt financing, agent processing, capacity pre-sale and hedging arbitrage. PTA futures market continues to enhance the ability of serving entities. In the functional evaluation of domestic futures in the first half of 2019, PTA futures continued to rank first in chemical products.
The data show that PTA futures have good liquidity, which provides convenience for related enterprises to avoid risks. In the first eight months of this year, PTA futures totaled 240 million hands (unilateral, the same below), accounting for about 10% of the National Futures market, with an average daily turnover of 1.47 million hands, an increase of 134% over the same period last year, and an average daily holding of 1.13 million hands, an increase of 41% over the same period last year.
In order to promote PTA futures to play a better role and serve related industries, Zheng Shang Institute also carried out continuous active work in October 2017 to promote contract activity in March, July and November. From January to August of this year, the average daily holding volume of target contracts accounted for 18.3%, the average daily trading volume accounted for 5.6%, and the delivery volume accounted for 30%. The market thickness continued to increase, which better met the needs of industrial customers to continuously participate in PTA futures trading and delivery.
It is understood that after PTA futures were introduced to foreign traders, foreign traders are now familiar with domestic futures market rules, rules, systems and participation processes, and gradually begin to try trading.
Since the internationalization of PTA futures, as of the end of August, 115 overseas customers have opened accounts. Overseas customers hold more than 10,000 positions. A total of 29 overseas brokerage agencies have completed the filing. They can carry out overseas brokerage business of PTA futures, and the market is running well.
