On November 8, it was learned from the regular press conference of the Securities and Futures Commission that the Securities and Futures Commission has officially approved the soda ash futures to be listed and traded on the Zhengzhou Commodity Exchange on December 6.
It is understood that China is the world's largest producer and consumer of soda ash. With the economic development, the consumption of soda ash in our country is increasing. In 2018, China's total soda ash demand was 25.12 million tons, a decrease of 660,000 tons from 2017, and an increase of 6.35 million tons from 2010, a total increase of 34% in 8 years.
Soda ash is one of the important chemical raw materials. 4% of soda ash is used in the food industry; the remaining 96% of soda ash is used as raw materials or auxiliary agents for industrial production. The main uses of soda ash include: First, the field of building materials. Soda ash is one of the main raw materials of flat glass, and it is also the main component of clarifying agent; the second is the field of chemical production. Soda ash is widely used in the manufacture of sodium silicate (commonly known as soda ash, water glass), sodium bicarbonate (commonly known as baking soda) and other products; the third is printing and dyeing metallurgy. Soda ash acts as a water softener in the textile production process; the fourth is the field of food processing. Soda ash is used as an additive to improve the dough, and can also be used in the production of monosodium glutamate and soy sauce.
In terms of production capacity, China's soda ash production is mainly concentrated in East China, Central China and Northwest China. In 2018, the soda ash production capacity in East China was approximately 11.91 million tons, accounting for 38% of the country's total production capacity, of which Jiangsu's total production capacity was 5.5 million tons, accounting for 46% in East China and 18% of the total national production capacity. In 2018, the capacity of soda ash in central China was 6.36 million tons, accounting for 20% of the total national capacity; the capacity of soda ash in Northwest China reached 5.15 million tons, accounting for 17% of the total national capacity. In addition, the soda ash production capacity in North China, Southwest China, South China and Northeast China accounted for 12%, 9%, 2% and 2% of the total national production capacity, respectively.
China is a net exporter of soda ash. In 2018, China exported 1.397 million tons of soda ash, imported 294,000 tons of soda ash, and net exports were 1.085 million tons. Compared with the total domestic soda ash output and total demand, exports and imports account for a small proportion, which is only one of the ways to regulate the supply and demand balance of the domestic soda ash market.
In terms of spot prices, from 2016 to 2017, soda ash and its downstream industries have gone through the process of de-capacity and capacity upgrades. The pace of production capacity changes between industries has caused a periodical mismatch in the supply and demand of soda ash, which has led to the The period experienced two rounds of cyclical fluctuations. In 2018, the soda ash price fluctuated slightly, but more frequently. Due to frequent price fluctuations and large fluctuations, market risks are becoming increasingly prominent. Soda ash production, trade, and consumer companies are in urgent need of risk aversion. We hope to launch soda ash futures as soon as possible to provide industry production operations with means and tools for price discovery and risk aversion.
Market sources told reporters that the listing of soda ash futures:
On the one hand, it helps to improve the price efficiency of the soda ash industry.
In spot trade, the price of soda ash reflects the current supply and demand relationship, and the price lacks authority and the market is low in transparency. After the soda ash futures are listed, continuous, open, authoritative, and transparent futures prices can be generated through trading, providing an effective reference for market agreed prices, helping industry chain companies to comprehensively analyze the soda ash market situation, and timely capturing the factors that affect the soda ash price, Advance judgment, timely response and accurate response will promote the healthy and stable development of the industry.
Through the forward price guidance mechanism of soda ash futures, the industrial chain can reasonably arrange production and operation and optimize resource allocation. Because the futures price formation mechanism can cover current and future macroeconomic, supply and demand information, soda ash futures prices often reflect market operations more effectively than spot prices, and are an effective tool for market allocation of resources.
On the other hand, it helps enterprises to avoid operating risks.
Taking flat glass production as an example, the purchase cost of heavy alkali accounts for more than 25% of the production cost of float glass, and the company is very sensitive to the price fluctuation of soda ash. However, due to the lack of efficient hedging tools, some companies can only be forced to use the method of hoarding to avoid market risks. Not only does it occupy a large amount of capital, but also the high storage cost is not conducive to the healthy development of the industry.
After the soda ash futures are listed, upstream and downstream enterprises can hedge through the futures market and use the leverage of futures trading margin to achieve hedging purpose with less capital, lock in procurement costs or sales profits in advance, and stabilize corporate profitability.
Relevant person in charge of Zhengshang Commercial Institute introduced that in 2012, Zhengshang Commercial Institute successfully listed glass futures. Soda ash is an important raw material for glass production. The listed soda ash futures can further improve the relevant industry chain futures variety system and increase the breadth and depth of the futures market serving the building materials industry. Recently, the Zhengshang Research Institute has publicly solicited opinions from all parties on the design of soda ash futures contracts and rules and regulations. In the future, it will continue to track the soda ash spot market and study and solicit opinions and suggestions from various parties to better meet the needs of industry chain enterprises to use soda ash futures to avoid risks Demand, and constantly improve the futures market's ability to serve the real economy.