Core Viewpoint - The Dalian Commodity Exchange (DCE) has announced the launch of monthly average price futures for linear low-density polyethylene (LLDPE), polyvinyl chloride (PVC), and polypropylene (PP), starting from October 28, 2023, marking a significant development in risk management tools for the domestic commodity futures market [1][6]. Group 1: Product Launch Details - The monthly average price futures will fill a gap in domestic average price risk management tools and facilitate long-cycle trade in the chemical industry through an innovative cash settlement mechanism [1][6]. - The trading unit for these futures contracts is set at 5 tons per contract, with a minimum price fluctuation of 1 yuan per ton, and the contracts will cover months from January to December [1][2]. - The initial contracts available for trading will be for the months of 2602, 2603, and 2604, with the base price determined by the corresponding physical delivery futures settlement price on October 28 [2]. Group 2: Trading and Settlement Mechanism - The cash settlement method will allow for direct payment of profits and losses between the parties based on the settlement price, complementing the existing physical delivery futures [2][3]. - The last trading day and last delivery day for the monthly average price futures will be the same, specifically the last trading day of the month prior to the contract month [2]. Group 3: Risk Management and Pricing Mechanism - The risk control system for the monthly average price futures will maintain consistency with existing physical delivery futures in terms of margin requirements and price limits, with stricter position limits for non-futures company members [3]. - The pricing mechanism will utilize a "phased calculation" model to ensure fair pricing and mitigate market manipulation risks, transitioning from direct anchoring to an average pricing model as the contract approaches expiration [4]. Group 4: Market Impact and Industry Response - The launch of these futures is expected to enhance pricing strategies for companies engaged in spot trading, providing a fair average price signal and enabling more diverse risk management strategies [6]. - Industry representatives have indicated that the introduction of monthly average price futures will positively impact the pricing influence of China's plastic industry in international markets, supporting high-quality development [6].

Core Viewpoint - The Dalian Commodity Exchange (DCE) is set to launch monthly average price futures for three chemical products: linear low-density polyethylene (LLDPE), polyvinyl chloride (PVC), and polypropylene (PP) on October 28, marking a significant development in China's commodity futures market [1][2]. Group 1: Product Launch Details - The monthly average price futures will be traded starting at 21:00 on October 28, with a trading unit of 5 tons per contract and a minimum price fluctuation of 1 yuan per ton [1]. - The contracts will cover months 1 to 12 and will align with corresponding physical delivery futures contracts, facilitating market participants' understanding [1]. Group 2: Market Impact and Innovations - The introduction of these futures fills a gap in domestic average price risk management tools and features an innovative cash settlement mechanism, enhancing the chemical industry's ability to conduct long-cycle trades [1][3]. - The DCE aims to create a complementary relationship between the new monthly average price futures and existing physical delivery futures, thereby improving the overall ecosystem of chemical derivatives and increasing the international influence of Chinese chemical prices [3]. Group 3: Trading and Regulatory Framework - On the first trading day, contracts for the months 2602, 2603, and 2604 will be listed, with the base price set according to the settlement price of the corresponding physical delivery futures on October 28 [2]. - The DCE has outlined various operational details, including application fees, margin requirements, and trading limits, while also preparing for the inclusion of these contracts in the range of tradable products for qualified foreign investors [2].