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Insight | Time: Oct 9 2020 8:14AM
China launches polyester staple fiber futures
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The trading of polyester staple fiber futures will be launched on Zhengzhou Commodity Exchange on Oct 12. Lots of attention has been drawn to the upcoming PSF futures and its impact on the market. In China's PSF market, the trading is conducted between PSF producers and downstream spinners and some traders also participate. However, due to the preparation of PSF futures since last year, several PTA and MEG traders and investors have taken part in PSF market, who usually use commodity futures to hedge. Since trading of PSF futures is approved to start from Oct 12, those traders are expected to participate.

On the one hand, China PSF plant operating rate is currently high, while inventory is low. New capacity in the last quarter of this year and the first half of 2021 is limited. On the other hand, there are heavily fresh capacities of PTA and PX expected to come on stream. Therefore, traders are likely to go long PSF to PTA spread. Traders started to stock up prior to the week-long holiday in the beginning of Oct after the price drops earlier. PSF processing spread has been widening recently to around 1300yuan/mt. With the nearing of PSF futures, some traders would mull over basis trading, and some downstream buyers may carry out transactions through the futures premium/discount mode.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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