Plastic or dilemma appropriate USES hedging strategy1

In early June, plastic strong gains motivation mainly comes from the steady increase in the price of crude oil, and continuing of petrochemical equipment maintenance plan. Due to the downstream demand, however, was not better, and the downstream inventory will is weak, hit a price behavior of petrochemical manufacturers and traders, the stagnation of the rise in spot limits the futures prices have jumped in. This week, the domestic economic growth weak rebound market pessimism, plastic 1309 contract prices downward move. Upstream prices to boost a weak economic growth, plastic or futures contracts will end early strength rise, the early long position need to convert ideas, locking upfront profits, in time to prevent the risk of prices.

plastic sheet more profit taking risks to

released on Thursday June HSBC China PMI data is relatively bad, substantially below the former values and expectations. The data showed that the economy continues to fall, shrinking manufacturing operation. Among them, maintain low plastic downstream manufacturing industry, agricultural film and packaging film factory starts is low, mainly according to the need to take the goods. Clinch a deal the deterioration of downstream demand, the spot market downturn, limits the previous PE spot price rise space. Combined with the negative impact of macroeconomic index and industrial products and plastic futures contract early rally has ended, and the price downward move, early plastic more than single face the risk of profit taking.

hedge strategy

though macro and downstream demand bad guide plastic futures prices fell, however, PE product prices and upstream petrochemical plant maintenance plan for PE spot and futures prices form a strong support. Dollar fell, gasoline demand season and political turmoil in the Middle East and so on factors, the recent trend of crude oil is stronger, the downstream chemical products prices will also be boosted. In addition, unlike PTA and chemical products such as PVC, PE manufacturers is less, the higher industry monopoly for producers won the high bargaining power. Combined with some recent sustained or petrochemical plant is about to enter the overhaul period, petrochina, sinopec recently slashed its smaller probability of LLDPE spot prices, big probability event for LLDPE spot prices to maintain stable. Analysis by above knowable, compared with other industrial products, plastic still has strong support, fallen co. , LTD. That is to say, the backhand short plastic risk/reward ratio is not high. And based on the above analysis, in order to solve the early single gains more profit and short plastic risk/reward ratio is not high, we made the hedging strategies of LLDPE and PVC.

the reason why we choose LLDPE and PVC including but not limited to the following:

1, the cost side, LLDPE and PVC synthesis was prepared by ethylene monomer, but PVC can use relatively cheap alternative production by calcium carbide method, the current PVC production by calcium carbide method still has a cost advantage;

2, the supply side, unlike LLDPE unit shutdown overhaul, PVC production equipment has high load rate and LLDPE supply is tense and PVC supply is abundant;

3, demand side, the two end demand is part of the overlap, LLDPE and PVC are currently in demand off-season.

4, are found to be in good correlation, PVC futures market since 2009, the correlation of LLDPE and PVC prices reached 76. 7%, both high price of 5000 yuan/ton, the lowest 2100 yuan/ton. According to the price history run to set feasible hedging strategy operation interval.

based on this, we take the social of the warehouse receipt number to measure the state of PE and PVC supply industry, through the comparison of LLDPE, PVC of the warehouse receipt number and price, in addition to the part of the period cost and demand differences of LLDPE and PVC impact on price trends, LLDPE and changes in the price trend of PVC and change trend of both the difference between the warehouse receipt number an inverse relationship. Recent rise faster than LLDPE PVC warehouse receipt of the warehouse receipt or, fundamental analysis is combined with the above knowable, LLDPE and PVC weak trend will continue.

in order to validate the profitability and feasibility of hedging strategy, we are trading strategy set perfect details, such as the position of the adjustment and check surplus, stop-loss set, but did not consider CangPing level fluctuations, slippage phenomenon and the problem of transaction cost. We according to the strategy of 2010 to the present market trading back, combined with the hedge strategy back the history of trading data shows that the hedging strategy is feasible.

based on this, we are waiting for LLDPE and PVC narrowing of the fundamentals remain strong support of LLDPE, PVC weak trend, do empty PVC LLDPE at the same time more.