(Yicai Global) Sept. 13 -- Risk control among Chinese polyester producers has improved with the steady turnover of purified terephthalic acid futures and the introduction of related products, according to an executive of the Zhengzhou Commodity Exchange.

The Henan province-based bourse, which began trading China's first commodity futures of PTA in 2006, has initially formed a system of risk management tools in the industry that makes composites used in clothing and plastics, the executive said to Yicai Global recently during an industry forum.

In recent years, leading polyester firms have been actively enhancing their industrial chains consisting of links such as crude oil, paraxylene, and textiles, and the central Chinese bourse has been quick to step into service.

The ZCE is looking to launch futures of paraxylene, an aromatic hydrocarbon, and polyethylene terephthalate chips, to spur the polyester industry's development, the source added. Particularly, paraxylene could let more institutional investors participate in futures trading to increase the market's liquidity and innovations.

Based on the steady operations of PTA futures, the ZCE has listed PTA options and short fiber futures, the source said, adding that the market scale has increased and the operational quality has risen. PTA futures have been deeply integrated with the industry during the past almost 16 years since launch, the insider added.

PTA has ranked first among all chemicals futures in China based on functionality for five straight years, according to an evaluation by the China Securities Regulatory Commission. Meanwhile, short fiber futures are closing the gap to be considered mature futures. Such staple fiber products started trading in 2020.

Next, the ZCE will focus on doing a good job in serving industries while constantly improving its frameworks, the insider said. The bourse will also aim to introduce warehouse deliveries to short fiber futures.

Risk management in the polyester industry will be strengthened to advance high-quality development, the executive said. The expansion of such derivates will be enhanced offshore to provide services to more international clients, the person added. Overseas clients were first allowed to participate in trading in 2018.

From January to July, some 2.1 million PTA futures exchanged hands daily on the ZCE. Meanwhile, the daily turnover of short fiber futures was 240,000 lots while the average open interest was 310,000 units. PTA options had a daily trading volume of 230,000 lots, and the average position at the end of each trading day was 210,000 lots.

Most major Chinese PTA makers use futures for hedging, the executive said. Manufacturers behind about half of China's short fiber output use futures to offset risks, the person added.

Some 400 offshore clients from 20 countries and regions have opened PTA futures trading accounts on the ZCE, and their contribution is more than 5 percent of the total turnover.

Editors: Shi Yi, Emmi Laine, Xiao Yi