The launch of PP, PVC and LLDPE options. Photo: Dalian Commodity Exchange

The Dalian Commodity Exchange in northeast China’s Liaoning Province said it has launched the trading of options for three major plastic chemical products – polypropylene (PP), polyvinyl chloride (PVC) and linear low-density polyethylene (LLDPE) – on Monday.

The listings of the three chemical options will help boost the risk-management ability of petrochemical enterprises and support the sound and stable development of the petrochemical industry. China is a major producer and consumer of PP, PVC and LLDPE.

Options, like futures, are important basic derivatives in mature international markets and play an irreplaceable role in helping industrial enterprises mitigate risks, said Fang Xinghai, vice-chairman of the China Securities Regulatory Commission (CSRC).

Steadily boosting the growth of the options market is a key part of the CSRC’s efforts to improve the derivatives market and meet the risk-management needs of enterprises in the real economy, he said.

China launched its first commodity option, the soybean meal option, in March 2017. Since then, 16 commodity options have been listed, covering sectors including agricultural products, metals, energy and the chemical industry, Fang said.

Seven of the options, along with 20 futures, have been listed for trading at the Dalian Commodity Exchange, according to the exchange.

Forex reserves

China’s foreign exchange reserves expanded to US$3.11 trillion at the end of June, up by US$10.6 billion, or 0.3%, from the end of May, according to the State Administration of Foreign Exchange (SAFE).

China’s forex market in June reported generally balanced supply and demand, said SAFE spokesperson Wang Chunying.

Wang said the uptick in the scale of forex reserves is affected by multiple factors, including exchange rates and changes in asset prices.

Factors including the global spread of Covid-19 as well as the monetary and fiscal stimulus of major economies led to the drop in the US dollar index and the rise in asset prices of major countries, according to Wang.

Wen Bin, the chief analyst at China Minsheng Bank, said cross-border capital inflows also contributed to the rise in scale, adding that renminbi assets are attracting more global investors.

Despite a complex external economic environment amid the Covid-19 pandemic, China’s economy is shifting towards good momentum with multiple indicators marginally improved, said Wang.

China’s economy maintains growth resilience, and the fundamentals for its long-term, sound development remain unchanged, providing a solid foundation for the stability of forex reserves, she added.

Reverse repos

The People’s Bank of China (PBoC), the country’s central bank, skipped open market operations via reverse repos for the eighth consecutive trading day on Wednesday. The banking system reports reasonable and sufficient liquidity at present, the PBoC said in an online statement.

No reverse repos matured Wednesday. A reverse repo is a process in which the central bank purchases securities from commercial banks through bidding, with an agreement to sell them back in the future.

China will pursue a prudent monetary policy in a more flexible and appropriate way, according to this year’s government work report.

New Development Bank

New Development Bank (NDB) announced Tuesday that it has successfully issued a 2 billion yuan ($285 million) bond in the China Interbank Bond Market, with a maturity of five years and a coupon rate of 3%.

“We are honored by the recognition and support received from investors during the bond issuance,” said Leslie Maasdorp, NDB vice-president and CFO. “The NDB is a regular issuer in China and the bank will continue to build its RMB bond curve.”

Maasdorp noted that the bank had just submitted a request for registering a 20 billion yuan bond program to the National Association of Financial Market Institutional Investors in China.

Headquartered in Shanghai, the NDB was established by Brazil, Russia, India, China and South Africa, known as BRICS. The bank formally opened in July 2015.

Taklimakan Desert

A 5G base station that recently began operation in the heart of the Taklimakan Desert in northwest China’s Xinjiang Uygur Autonomous Region is expected to help in the construction of an intelligent oilfield in the desert.

Sinopec Northwest Oilfield Company, the explorer of the oilfield, said its Shunbei Oilfield is deemed Asia’s deepest onshore oilfield. It is located in the heart of the Taklimakan Desert.

The exploration and exploitation activities in the oilfield are challenging as oil is usually found more than 7,300 meters underground, the company added.

The story was written by Xu Jiangshan and Liu Licong and first published at ATimesCN.com. It was translated by Nadeem Xu.

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