Three Major Oil Companies Support the China Plastics Conference
The 2010 China Plastics Industry Conference secretariat has announced that Sinopec Chemical Products, CNPC Oil Refining and CNOOC will be lending special support to this year’s conference, which will be held in Hangzhou on May 26th and 27th.
China’s three major oil companies play a key role in the domestic petrochemicals and plastics industry, with Sinopec and CNPC polyethylene production capacity accounting for 34% and 33% of the nationwide total respectively. Their influence over the domestic polyethylene market and prices is also relatively large.
Since the listing of LLDPE futures at the Dalian Commodity Exchange (DCE) in 2007, trading volumes and market participation have grown, and the futures market’s influence over the spot market has increased. During the 2008 global financial crisis, the LLDPE futures market provided an early indication of the spot market trend, and the enterprises that participated in the futures market were able to successfully utilize the market to hedge against the risk of large losses. The plastics futures market is exercising an ever greater influence over the industry, with even the largest petrochemical enterprises that play a direct role in price setting using the futures market as a reference. In 2009, Sinopec Chemical Products Sales Company invited futures professionals to provide training on using the system to perform hedging and risk management operations.
According to Zhao Tiebin, Director of CNNOC Chemical Products Plastics Department, since the listing of LLDPE and other chemical futures products, along with increasing liquidity and growing influence of the market, the domestic chemicals industry’s pricing models and trading methods have slowly begun to change. Some companies have begun to develop their related trading strategies in accordance with the price trends in the futures market. By using the futures market, they have been able to hedge some of their operational risks and achieve stable operations, thereby increasing their competitiveness.
Zhao Tiebin said that, looking at the past two Plastics Industry Conferences, we can see that the event is a comprehensive collection of industry information and resources, and the content of the speeches given at each conference, along with serving as an important reference value for petrochemical business operations, had an important influence on the development and production of the domestic plastics industry in the latter half of the year.