OREANDA-NEWS. SGX PX swaps hit their fourth consecutive monthly record in Jul 2015 with 81,500mt cleared, and open interest also ended the month at a record 72,000mt. Launched in Dec 2014, PX swaps minimise basis for hedgers otherwise using proxy contracts. As a cleared cash-settled product, counterparty credit risk is greatly reduced while also providing greater and more flexible trading strategies. SGX offers margins credits on opposite positions across our Aromatics and Naptha products.

Record Volume & Open Interest
The SGX Paraxylene (PX) swap contract continued to experience strong growth momentum in Jul 2015, hitting new records in both monthly cleared volume and month-end open interest. Total PX volume cleared in Jul 2015 reached a record high of 81,500 mt and month-end open interest also achieved a record high of 72,000 mt.

Lower Basis Risk for Hedgers
SGX PX swaps offer a better and more direct risk management tool for PTA-makers who wish to hedge their PX raw material cost and naphtha crackers who wish to lock in their PX production revenue. SGX PX swaps provide lower basis risk for hedging purposes relative to other proxies such as crude oil and naphtha.

Reduced Credit Risk & Increased Flexibility
SGX PX clearing mitigates the default risk between buyers and sellers. A cleared derivative product also provides the means and flexibility for participants to trade the PX market without getting involved in the underlying physical PX product and incurring the associated delivery and default issues. As a result, a cash-settled derivative contract makes the execution of trading strategies involving different products and different types of counterparties more efficient.

Spread Margin Savings Across SGX Aromatics & Naptha Contracts
Customers who clear PX, BZ and Naphtha using the same account on SGX may enjoy margin savings of up to 50%, enhancing capital efficiencies. Margins credits provided are as follows:

  • 1kt Naphtha MOPJ vs 500mt PX (30% margin credit)
  • 1kt Naphtha MOPJ vs 1kt BZ (50% margin credit)
  • 500mt PX vs 500mt BZ (30% margin credit)

SGX Participating in Platts Asian Petrochemicals Markets Conference in Shanghai This Month
SGX will be participating in the Platts Asian Petrochemical Conference on 27-28 Aug 2015 at the Grand Hyatt Shanghai.  Please visit us at our booth at the conference, or alternatively contact us to arrange for a meeting at your office. SGX has negotiated a special discount  for customers who wish to attend this conference. Details of the conference and the registration form are attached.