China Iron and Steel Association calls for reduction in production, steel companies use derivatives to fight disease
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Securities 武汉夜生活网 Times reporter Wei Shuguang’s epidemic, due to transportation control, downstream resumption of postponement and other effects, domestic steel mills are facing fewer downstream orders, backlogs of steel stocks and shortage of upstream raw materials.
At the afternoon meeting of the China Iron and Steel Association on February 22, Vice Chairman Camel Iron ranks, iron and steel enterprises grasp the production rhythm and take measures to reduce production and limit production.
The Securities Times reporter learned that under the influence of the epidemic, some steel mills have taken measures to reduce production and equipment maintenance, and arranged to overhaul production equipment to reduce physical output and material consumption.
In the face of increasing market uncertainty risks, steel companies have significantly increased their efforts to use the derivatives market 武汉夜生活网 as a hedge.
At present, the iron ore industry’s customer positions have increased by 28% each year, indicating that steel companies have increased demand for corporate hedging.
Transaction data show that since the beginning of this year, unilateral daily average iron ore futures have been traded and positions have been 74.
40,000 hands, 84.
40,000 hands, compared with the same period last year, the turnover decreased by 12%, and positions increased by 28%.
The data also shows that as of February 21st, iron ore futures corporate customers held 49% of positions, which had increased by 4 percentage points each year, and the proportion of hedging transactions had increased by 9 percentage points.
In addition to increasing the strength of futures hedging, the iron ore replenishment market must fully climb.
Data show that on February 3, the proportion of rights traded and positions in the underlying futures increased significantly, respectively, to 12.
1% and 18.
On the same day, iron ore futures opened to a limit, but the budget was still tradable, which became an effective tool for managing the risk of futures positions and market price fluctuations.
As of February 21, the average daily volume of iron ore futures was 2.
50,000 lots, with an average daily position of 11.
90,000 hands, 22% and 36% higher than before the Spring Festival.
The reporter was informed in the interview that during the epidemic prevention and control period, the combined steel companies actively used derivative tools to hedge downstream products and upstream raw materials.
A steel mill took advantage of the epidemic situation in early February and the timing of changes in the price of iron ore under the influence of the outer disk to carry out long hedging of iron ore and coke futures to lock in the price and cost of raw materials; the other company has long been involved in futures management of raw material and product price risksThis year, large-scale steel mills locked prices in advance through iron ore futures and reduced raw material costs by nearly 100 million US dollars at current prices, effectively hedged the potential impact of the epidemic.
Jingchuan, deputy general manager of CUHK Futures believes, “Under the influence of the new crown pneumonia epidemic, steel companies are using various futures and budget strategies to ensure the stable operation of production and operations.
“With the on-site budget, when worried about rising raw material prices, companies can lock in costs by buying bullish budgets.
If the price goes up, the profit of the bullish budget can make up for the losses in spot purchases; if the price goes down, the company will not pay extra costs and still enjoy the benefits of the decline in the price of raw materials.
Due to the full preparation of all parties, the iron ore and most domestic varieties only fell on the first day of the market, and then they stabilized, maintaining a safe and stable operating trend, and providing effective futures for companies that resume work after the holidays.Price signals and hedging instruments.
In order to ensure the stable operation of the market, the Exchange conducted early risk research and judgment and prepared a risk prevention and control plan.
The market was opened after the Spring Festival holiday. Dashang continued to strengthen market services and supervision, and issued “warm reminders” to members three times, announcing measures to facilitate the handling of epidemic prevention and control members and customers ‘business. In response to the impact of transportation during the epidemic prevention and control phase,Dashang promotes and supports customers to adopt cash transfer, and the factory warehouse delivery mode flexibly disposes the spot to ensure smooth delivery business.