Date：February 28, 2014
Source: Futures Daily

　　Polypropylene (PP) futures is launched for trading on the Dalian Commodity Exchange (DCE) today. According to the notice that the DCE issued yesterday, the first batch of 10 PP contracts listed is composed of PP1405, PP1406, PP1407, PP1408, PP1409, PP1410, PP1411, PP1412, PP1501 and PP1502, with the benchmark price of each contract being RMB10,500/ton.
　　The trading unit of the DCE’s PP futures contract is 50 ton/contract, with the minimum price change of RMB1/ton, the temporary minimum margin of 5% of the contract value, and the price limit on the first day of 8% of the benchmark price. The trading fee of PP futures contract will be charged according to 0.005% of the contract value. The fee for liquidation after opening a new position on the same day will be charged according to 0.0025% of the contract value. Based on the benchmark price announced by the DCE and the 10% margin (including fees charged by futures companies), the fee for trading one PP futures contract will be about RMB5,200, a figure quite close to that of the LLDPE futures contract.
　　Liu Jie, an PP futures analyst from Super Creating Information said that the benchmark price of PP futures contract was slightly lower than the factory price of petrochemical enterprises’ filament-graded products priced at RMB10,750-11,100/ton. In 2013, the price fluctuation range of domestic filament-graded PP was between RMB10,000/ton and RMB12,500/ton. “The PP futures contract is not likely to fall below the benchmark price,” said Liu.
　　Statistics from Super Creating Information shows that the PP market prices were steady yesterday, with the prevailing quotation for filament-graded PP in North China market between RMB10,800/ton and RMB11,100/ton while that of low melting copolymer between RMB11,200/ton and RMB11,400/ton. As PetroChina North China and Sinopec Central China increased prices in some products, traders tentatively raised the prices. Recently, the overall unfavorable demand of inferior PP, coupled with hindered shipment, resulted in that traders in North China and South China dominantly remained their former quotations.
　　Wang Hua, an analyst from Bohai Futures expected that we would see stronger PP futures after the opening today and a narrower difference between futures and spot prices. “But the trend of the futures prices is not optimistic due to the current high public stock of PP spot market and uncompleted destocking,” said Wang.
　　Both PP and LLDPE are among the top five general plastics. PP and LLDPE futures contracts enjoy the same trading unit of 5 ton/contract. What should be noted is that the minimum price change of PP futures contract is RMB1/ton while that of LLDPE futures contract is RMB5/ton. In terms of trading fee, PP futures is charged based on a certain proportion of trading amount while that of LLDEP futures is based on the fixed RMB 5/contract.