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].

Core Viewpoint - The Dalian Commodity Exchange (DCE) is set to launch monthly average price futures for linear low-density polyethylene (LLDPE), polyvinyl chloride (PVC), and polypropylene (PP) on October 28, 2023, marking a significant development in domestic commodity futures aimed at average price trading scenarios [1][3]. Group 1: Product Details - The monthly average price futures will fill a gap in domestic average price risk management tools and feature an innovative cash settlement mechanism, facilitating long-cycle trade in the chemical industry [3]. - Each contract will have a trading unit of 5 tons, a quotation unit of RMB per ton, and a minimum price fluctuation of RMB 1 per ton, aligning with existing physical delivery futures contracts [3]. - The initial contracts available for trading will be for the months of February, March, and April 2026, with the base price set according to the settlement price of the corresponding physical delivery futures on October 28 [3]. Group 2: Settlement and Risk Management - The cash settlement method allows for direct profit and loss settlement between parties based on the settlement price, complementing physical delivery futures [4]. - The last trading day and last delivery day for the contracts will be the same, set for the last trading day of the month prior to the contract month [4]. - The risk control framework will maintain consistency with existing physical delivery futures, including margin requirements and price limits, while imposing stricter position limits for non-futures company members [4]. Group 3: Pricing Mechanism - The DCE will implement a "phased calculation" model for settlement prices to ensure fairness and mitigate market manipulation risks [5]. - During the month prior to the contract month, the daily settlement price will be anchored to the corresponding physical delivery futures, transitioning to an average price calculation in the contract month [5]. Group 4: Trading Instructions and Market Preparation - The new futures will support three types of arbitrage trading instructions, enhancing trading strategies for market participants [6]. - The DCE has conducted extensive market preparation activities, including online and offline training sessions, to ensure a smooth launch of the new products [8]. - Industry representatives have indicated that the introduction of monthly average price futures will enhance pricing strategies and risk management for companies in the chemical sector [8]. Group 5: Market Impact - The launch of these futures is seen as a crucial step in aligning the futures market with industry needs and enhancing the international pricing influence of Chinese chemical products [9]. - The DCE aims to create a complementary relationship between the new monthly average price futures and existing physical delivery futures, contributing to a more comprehensive chemical derivatives ecosystem [9].