PVC: The Connection between Future and Spot has been Strengthened, and Delivery Data would be Analyzed

PVC: The Connection between Future and Spot has been Strengthened, and Delivery Data would be Analyzed

1 Preface

As time goes, the intervention of futures and spot has brought new vitality to the spot market in the current and future where the financialization of commodities is becoming increasingly strong. Over the past 40 years, many commodities have evolved from low complexity to high complexity, including industrial chains such as crude oil, metals, coal, energy, chemistry, resin, and plasticization. The complexity of commodity is the lowest in its initial stage of formation, and the influencing factors are relatively single. As the market develops and evolves, it gradually transitions to medium complexity. At this time, the influencing factors begin to increase gradually. Finally, as the market matures, the complexity of the commodity reaches its highest, and the influencing factors of the commodity begin to show diversification.

Since the listing of PVC futures in May 2009, the linkage between futures and spot markets has gradually strengthened over time. The volatility of the futures market has begun to affect the trend of the spot market, especially after experiencing extreme market conditions from 2020 to 2021 to 2022. From 2022 to 2023, the domestic PVC position began to increase gradually, and the main contract position approached the position of large varieties, showing good activity. The price discovery function of the futures market has also led to a shift in the sales model of the spot market, and hedging point prices have become popular. As spot prices gradually become active in the spot market, from the perspective of the industrial chain, both production enterprises, intermediate traders, and downstream product enterprises have maintained sufficient attention to the PVC futures market. Next, let's take a look at the relevant delivery data.

2 List of Quality Inspection Institutions, released on July 14, 2023. Name of PVC Quality Inspection Institution: China Inspection and Certification Group Inspection Co., Ltd. (18F, Zhongjian Building, No. 18 Xibahe Dongli, Chaoyang District, Beijing), Tongbiao Standard Technology Services Co., Ltd. (4F Mineral Department, Building 3, Qilai Industrial City, No. 899 Yishan Road, Xuhui District, Shanghai), or No. 143 Tongbiao Center Mineral Department, Zhuzhou Road, Laoshan District, Qingdao), Ningbo Customs Technology Center (925, Building A, No. 66 Qingyi Road, High tech Zone, Ningbo City).

3 PVC futures warehousing fee and delivery handling fee: PVC futures warehousing fee is 1 yuan/ton per day, and delivery handling fee is 2 yuan/ton.

4 The maximum price limit for inspection and sampling fees of polyvinyl chloride (PVC)

5 Analysis of delivery volume

In the preface, we also mentioned that with the strengthening of the linkage between futures and spot, the domestic PVC market is gradually undergoing a transformation. With the gradual maturity of futures tools, the delivery volume of PVC has also shown a growth trend. From the figure, it can be seen that on the one hand, in the delivery data from January to December each year, the delivery of the main contract 01-05-09 is relatively active; On the other hand, the delivery volume of consecutive contracts has also shown a gradual increase since 2020. Monthly delivery in 2023 has become the norm, with a total of 51993 hands PVC deliveries as of 2023, with a total delivery amount of 1581787575 yuan and an average delivery price of 6084.62 yuan/ton.

6 Future prospects

With the enhancement of financial attributes, the future futures market will inevitably have a further impact on the spot market, and with the improvement and activity of financial derivative tools, options will gradually enter the spot market. In the current spot market, point prices in the East China and South China regions have become the norm for PVC spot sales, while the north is still filled with point prices and buy it now prices, and some regions even rely mainly on buy it now price, And the southwest region has also gradually joined the list of point prices with the transformation of sales models. Upstream production enterprises and downstream product enterprises have also begun to pay attention to the PVC futures and options market. In the future, the PVC futures and spot markets will become increasingly closely connected.