Futures What are the types of chemical futures

Chemical futures Many people do not understand, chemical futures is also a more common commodity futures in recent years, then what are the types of chemical futures? Hundred safety net to give you a detailed explanation.

Chemical futures include these varieties: plastics, PTA, PP, PVC, methanol, asphalt, (natural) rubber. Plastic, asphalt, rubber and even methanol are OK, at least most people will be exposed to it in life, but the remaining several varieties, many people do not understand the information.

Synthetic resin plate - PP, PVC, plastic.

PP, PVC, plastics are very close, they are both synthetic resins. What is synthetic resin?

Synthetic resin is one of the three major synthetic materials in the world, the other two are synthetic rubber and synthetic fiber, of which synthetic resin is the highest production and consumption of synthetic materials. In popular understanding, synthetic resin is a material that can be melted or softened at a certain temperature, and can be qualitatively cured, with different compositions and synthesis of various properties. A variety of plastic products is a typical representative.

Synthetic resins include five general resins: polyethylene PE, polyvinyl chloride PVC, polypropylene PP, polystyrene PS, ABS resin. Among them, PE is mainly divided into linear low density polyethylene (LLDPE), low density polyethylene (LDPE), high density polyethylene (HDPE) three categories. The plastic traded by Daishang actually refers to linear low density polyethylene (LLDPE).

The production process of PP, PVC and plastics is as follows:

1, the production path of plastic (LLDPE) : "crude oil - naphtha - ethylene -LLDPE".

2, PP(polypropylene) production path: "crude oil - naphtha - propylene - polypropylene".

3, PVC(polyvinyl chloride) production path: "crude oil - naphtha - ethylene - polypropylene".

The methods for identifying financial traps in chemical futures are as follows:

1, many have not played how can you call arbitrage

Compared with other sectors, chemical arbitrage opportunities and space are relatively difficult to grasp. After all, what really has Chinese characteristics may be said to be black and chemicals. So far, black has put all varieties on, and black itself has established a better internal relationship, because it is relatively close to the logical relationship. And chemicals are more troublesome, so far, the listed varieties at the beginning of the listing are saying, these chemicals are not with crude oil opportunities? We have no domestic crude oil. In fact, even if there is crude oil, we also find that these chemicals are in a relatively low position in the industrial chain, and the distance from crude oil is relatively long, which largely limits our normal arbitrage in the industry. At the same time, the logical relationship between these varieties themselves does not have a clear crushing relationship like beans, so horizontal arbitrage is also problematic.

2, the basic principles of arbitrage do not understand how can be called arbitrage

Back to the front of us to talk about domestic varieties, the other main difficulty we face to do domestic chemical arbitrage is where? Not enough tools. We see a lot of varieties of agricultural products, in fact, a lot of color, black is also a lot, chemicals are relatively less, which is also mixed with some varieties without mobility, may have just recently the mobility of PVC up again, the variety itself is relatively small. Then there is the problem of Chinese characteristics, not continuous contracts, only the main contract has enough open positions, and the forward contract has no open positions at all, but this is only a relatively small problem, because it can still play. More of a problem lies in the lack of relationships that are specifically designed to correct some price comparisons, or monthly spreads. In fact, if the variety is complete and the tools are complete, we should first choose this way, we should first choose options of the same variety and the same contract, if there are options, it will solve the volatility problem. If the choice of a tool is not enough, we can consider whether to choose in the monthly difference, then we choose varieties with high correlation, then we choose varieties with high statistical correlation, and then we choose varieties with poor correlation, and make cross-varieties, which is not arbitrage, more is to hedge development, but it is obvious that we lack such tools.

3. Arbitrage introduces new problems

Can you set PP, PTA? This is a very old arbitrage and I can tell you about it, because it was proposed in 2011. The main core idea of this arbitrage is to hedge a part of the crude oil risk, because at that time only these two varieties, PVC has been decoupled from crude oil. So what is it essentially? It's not an arbitrage, it's a strong and weak hedging relationship, based on two separate balance sheets, which is problematic. Even if we look at the upstream of PTA, the naphtha used by PX is not an olefin material, many of us, including futures companies, will push some reports, which will talk about the price of naphtha, but the actual problem is what is the naphtha used to make olefin? It is a basic chemical raw material, may also use some LPG and the like, it is to do olefin raw materials, this raw material is not to do aromatics. The naphtha used to make aromatics is to make a deep discount, and this deep discount relationship alone can pit many people to death. But today this variety of hedging, there is a certain sense, I said hedging is not arbitrage, because after five or six years of development of PTA processing profits are very thin. When a variety it has become very thin, then its correlation with the upstream raw materials will be greatly improved, if we do not look at the high inventory of PTA, then its price will be what? In other words, I want to maintain a processing profit, since I want to maintain delivery, I can't shut down the factory, since I want to move the warehouse from September to January, I can't say that there is a problem between the device 9 and 1, so I have to give it processing profit in January, so it will become very effective for processing profit. And at the top end we see the middle raw materials on the top end of the international market, under normal circumstances how to price? Everyone is very simple, there are not many participants, and everyone knows each other, I give a reasonable profit to each other, this will fluctuate, there will be some event factors to cause it to fluctuate, but relatively more stable. In this case, the correlation between PTA and crude oil is greatly improved, and this arbitrage may be established in the perspective of PTA, but it is not guaranteed that PE is not a problem.