Impact Sample Of Large Price Rise: The Number Of "Insured" Of Listed Companies Doubled In The First Quarter Of The Year

On April 8, the 50th meeting of the financial committee of the State Council pointed out that we should "pay attention to the trend of commodity prices" and keep prices basically stable. Subsequently, the forum of experts and entrepreneurs on the economic situation also involved "strengthening the market regulation of raw materials to ease the cost pressure of enterprises".

In addition, according to the data statistics of 21 hard core investment research on April 9, 2020, the (Wenhua commodity index) fell by 13.14%, with a weighted average price of 140.44 points; in the first quarter of 2021, the index range increased by 5.98%, and the weighted average price was 176.19 points, up 25.46% year-on-year.

However, in terms of petrochemical, non-ferrous metals, black goods and soft goods, only black series has strong independent pricing ability in China.

It is for this reason that after the strong rebound in the above commodity prices, all parties in the market are worried about imported inflation.

However, the price operation of international priced commodities has its own rules, which is difficult to control. In the face of the pressure of rising costs, how should the downstream enterprises deal with it? What are the effective countermeasures?

In short, it can be divided into two categories. One method is relatively passive. After the cost rises, the product price will be raised to transmit the pressure of raw material price rise to the terminal market step by step. The other way is to take a lot of initiative to transfer the risk of cost rise through hedging in derivatives market. However, the latter is a systematic project, which requires personnel, strategy and execution, which greatly tests the comprehensive ability of the risk management team.

In addition, the systemic rise of commodities is also stimulating the enthusiasm of enterprises to participate in derivatives market hedging. In the first quarter of this year, a total of 148 A-share listed companies issued "hedging" related announcements, nearly double the growth of the previous year.

Raw materials rose to a high level, listed companies "Insured" cases doubled

Steel stocks, the most powerful sector in the secondary market in recent years, are not only driven by their own undervalued advantages, but also affected by the industry's profit growth in the first quarter of 2021.

After excluding Chongqing Iron and Steel Co., Ltd., which has excessive growth rate, the remaining six steel enterprises which have released the first quarter performance forecast, are expected to have a lower limit of net profit growth of 345% on a year-on-year basis.

On the one hand, there is a reason for the low base in the same period of 2020, on the other hand, it is affected by the rise of commodity prices. In late March, Tangshan billet price reached a 13 year high. In early April, the main contract of rebar futures rose to 5200 yuan / ton, close to the peak in February 2011.

Although the product price is absolutely high, the profitability of the two stages is not the same.

On March 26, the 21st Century Capital Research Institute and Lange Iron and steel jointly launched the "21 hard core investment and research", which pointed out that "the recent round of steel price rise is mainly due to the rise of iron ore, coke and other costs Under the sharp rise in costs, the profit of the steel industry has been seriously swallowed up. At present, the profitability of the steel industry is at a relatively low level since the nearly 10-year cycle, which is only slightly stronger than the downturn stage of overcapacity in 2014 and 2015. "

"Steel prices continued to rise in the first quarter, but because the prices of raw materials and fuels are still at a relatively high level, cost control is still the top priority. Our original intention of risk management is to serve the company's production and operation, and we design schemes more around the purpose of locking in profits, promoting sales and inventory adjustment. Even if we expect the price of finished products to increase more, the team still sticks to the original intention of profit locking, adjust the hedging strategy appropriately and optimize the hedging effect, rather than simply chasing the futures returns. In the first quarter, through meticulous management, the company significantly reduced procurement costs and increased gross profit on orders. " Nan Steel Co president Yao Yongkuan said.

This is not an example. As mentioned above, in the context of the systemic rise in the commodity market, more and more listed companies have chosen to hedge their risks through the derivatives market.

According to the statistics of 21st century economic report, in the first quarter of 2020, a total of 75 listed companies issued 123 "hedging" related announcements. In the first quarter of 2021, 148 listed companies issued 300 related announcements, and the number of "Insured" enterprises nearly doubled.

In addition, some public data also show that the rise in commodity market prices is prompting more corporate investors to avoid risks through the derivatives market.

Take the Wenhua commodity index as an example, the low point of position in the first quarter of 2020 is about 14.5 million hands, and this index once increased to 25 million hands in the first quarter of this year.

It should be pointed out that due to the relatively low proportion of "overnight" positions held by individual investors, a large part of the increase in positions mentioned above comes from corporate clients, that is, corporate investors.

The monthly statistical data of the exchange also showed that from January to March 2020, the accumulated futures delivery volume of the exchange reached 308500, an increase of 30.49% over the same period of last year.

According to the relevant rules, individual investors can not deliver their positions, and the increase of the above delivery volume mainly focuses on the production enterprises, trade and other aspects of commodity manufacturing and circulation.

However, there are still some practical problems to be solved.

The reporter learned that, in terms of iron and steel production enterprises, although the industrial participation has increased year by year in recent years, some state-owned enterprises have made relatively slow progress.

On the one hand, it is related to the attribute and decision-making system of the enterprise. On the other hand, the operation mode of steel enterprise is far more complicated than that of trade link due to the variety and long process involved in the operation of steel enterprise.

What's more, the derivatives market is highly specialized, and the perfect hedging effect needs to match a set of precise risk management system.

Nangang stock sample: risk management nurtures main business market development

It is difficult to avoid the performance fluctuation of cyclical industries. The space left for enterprises is more focused on how to "iron out" the cycle, so as to achieve stable operation.

Nanjing Iron and Steel Co., Ltd., located in the coastal area of Jiangsu Province, is also a private enterprise, so the company style in the industry will be more open. In terms of the use of derivatives, the company is undoubtedly in the forefront of the whole industry.

In 2009, Nanjing Iron and Steel Co., Ltd. has taken the lead in participating in the listing of rebar futures. In 2013, the company's "double hammer" rebar volume was the physical delivery brand of the previous exchange.

"We will mainly carry out three levels of Hedging: basic hedging, strategic hedging and virtual steel plant hedging, and gradually increase the hedging scale." According to Xu Lin, vice president of Nanjing Iron and Steel Co., Ltd., futures contracts such as iron ore, coke, coking coal, rebar, hot coil and nickel were mainly used according to the demand.

He said that from 2015 to 2018, according to the actual situation of Nanjing Iron and Steel Co., Ltd., the company mainly carried out three levels of Hedging: basic hedging, strategic hedging and virtual steel plant hedging, and gradually increased the hedging scale, and normalized and systematic management of orders and inventory.

However, since 2019, Nangang's risk management system has been further upgraded. Through the adjustment of profit locking, purchasing cost reduction and inventory adjustment, we can deal with the changes of sales pricing mode, cost control and customer relationship.

Taking profit locking as an example, when the spot Department of Nanjing Iron and Steel Co., Ltd. adopts fixed price for forward order sales, the risk management team of the company will lock forward the forward cost by using iron ore, coke and other raw and fuel futures, so as to make the forward sales order have stable gross profit and prevent the large change of raw and fuel cost from causing adverse impact on the company's profit.

This is very important in the context of rising iron ore and coke prices in 2020.

In the second quarter of 2020, Nanjing Iron and Steel Co., Ltd. will increase the hedging ratio to a high proportion range, so as to hedge the company's cost in time. In the whole year, the hedging orders executed by Nanjing Iron and Steel Co., Ltd. gained about 0-100 yuan per ton after hedging, effectively hedging the risk of sharp rise in raw and fuel prices.

"On the whole, affected by the rise of bulk raw materials and fuels, the gross profit per ton of steel in the industry will weaken year on year in 2020, and the gain of RMB 0-100 after hedging is very considerable." Yao Yongkuan said.

It is worth noting that the integrated management of futures and cash of Nanjing Iron and Steel Co., Ltd., to a certain extent, also plays a positive role in promoting its market expansion and the coordinated development of the upstream and downstream of the industrial chain.

As the traditional superior variety of Nangang, ship plate is an excellent example of the combination of the company's future and present.

According to the traditional mode, shipyards have a long period from receiving orders to delivering ships. During this period, the purchasing time and pricing mode of ship plates become difficult problems, and they are faced with more market risks. If the steel price is higher, the shipyard will earn less, and if the steel price is lower, the profits of Nangang will be damaged. It is difficult for both sides to agree on a satisfactory price, and they often fall into a game situation.

However, after using derivatives tools, steel mills and shipyards have become a consortium in the whole industry chain.

After winning the bid, the shipyard and the steel plant signed a long-term price lock order under the condition that the shipyard and the steel plant met their respective processing profits. Subsequently, Nangang locked in the cost of raw materials such as iron ore and coke through the futures market, and transferred the market risk within the delivery period, helping the shipyard and Nangang to keep their own operating profits.

Equivalent to, a risk management team of Nanjing Iron and Steel Co., Ltd. has done hedging work for two enterprises. And under the demonstration effect of this case, the company also takes this opportunity to cut into the entire shipbuilding industry chain, and helps China's shipbuilding industry to enhance its competitiveness.

When talking about his own experience, Geng Haobo, deputy director of risk management of Nangang securities department, gave the following suggestions to other enterprises involved in hedging.

The first is the cognitive level. Risk management is a systematic long-term project, which needs a lot of time to settle. It is not because of the adverse changes in commodity prices in a certain year and the pressure on enterprises to operate, derivatives should not be used as a lifesaver.

Secondly, enterprise risk management needs institutional support. For example, the management needs to have a correct understanding of hedging, matching management system, including decision-making, process and approval, and the risk management model also needs to be continuously iterated.

Thirdly, it is the accounting problem of futures and cash. It is necessary to combine the two markets for assessment, instead of simple KPI assessment based on the profit and loss of the futures end. Instead, the two markets can get through the calculation and comprehensively consider whether the expected hedging effect of tons can be achieved.

Finally, an excellent team is needed as a support to avoid dogmatic dead hedging and mechanical hedging. If the position is obtained from the beginning to the end according to the 100% proportion of the spot, it can be adjusted flexibly and timely according to the expected supply and demand and basis.

The effect of futures price guidance is outstanding, and the operation mode of black industry chain is upgraded

After nearly a decade of rapid development, the domestic derivatives market has gradually matured, and the coverage of the black series commodity industry represented by the coal coke steel industry chain is particularly prominent.

At the same time, the listing, operation and maturity of these futures varieties are also profoundly changing the pricing mode of their respective industries.

Taking coke as an example, its industry pricing mode mainly adopts the mode of locking quantity and not locking price, and price following the market. The coking plant also has long-term preferential treatment for strategic customers, and the steel mill also has additional subsidies for important suppliers in the tense period. In addition, there are also monthly settlement, lock quantity and price lock, foreign trade index pricing, buy it now price and other modes.

On the contrary, the coke futures of Dalian stock exchange have been listed for 10 years, and their positions have increased from 0 to more than 200000 hands, which has become one of the most popular derivatives in China.

During the epidemic period in 2020, the related industry chain companies have realized the stable operation of enterprises by using the futures.

Shanxi Pengfei group, in the face of the new epidemic situation at the beginning of last year, the risk of enterprise operation increased sharply.

"Our first reaction was to try our best to avoid risks, so in the early stage of outbreak, we hedged spot orders on the futures side." Pengfei group related person in charge said, but after the Spring Festival found that the supply and transportation of coking coal were affected, which suppressed the start-up of coke enterprises. This is what we did not expect. Therefore, after the opening of the market, we closed the hedging position of the rivals at the first time, and finally realized profits, which made up for the loss of production decline brought by the epidemic to enterprises to a certain extent.

However, in the second half of 2020, the market direction will change again, the coking industry will continue to promote de capacity, and the price of Coke will rise soon.

At this time, Pengfei group was also faced with the pressure of de capacity. In order to reduce the loss caused by de capacity, the company finally chose the strategy of "spot inventory management plus cash hedging".

"At that time, we made tens of thousands of tons of spot stock in the port, and the cost of loading was about 2150 yuan. When the market finally faced the risk of falling price, the company began to carry out hedging operation on the disk, and the opening cost was more than 2900 yuan. Then, the spot continued to sell, and finally some of the spot goods were not sold. We chose delivery, and the settlement price was about 2530 yuan. " Pengfei group said.

Finally, the result of the transaction is that the company gains more than 700 yuan per ton through risk hedging, and the enterprise's profit is maximized.

It should be pointed out that the participation of enterprises including Pengfei group in the derivatives market is also a process of continuous exploration, learning and improvement, in which many innovative models can be derived to help enterprises operate.

According to frost Sullivan data, China Xuyang group is the world's largest independent coke producer and supplier based on the number of 2017.

In the coke industry risk management, the company also went far.

"The three business teams of production and processing, trade purchase and sale, and futures hedging business are not separated, but fully integrated and unified in decision-making." Xuyang group said.

According to reports, the company has set up hedging business decision-making center at the group level to conduct unified dispatching and command of business, and decompose and implement business objectives and measures from top to bottom, effectively realizing the full combination of spot and futures, making the factory processing, spot trade and Futures Hedging develop synergistically and operate in an integrated way.

For example, if the company's sales team can't purchase spot goods in the upstream, they can buy hedging on futures. If there are spot goods in the upstream and no customers in the downstream, they can carry out the corresponding operation of selling hedging on futures.

In addition, after discussion with customers of downstream steel mills, Xuyang group also participated in the pilot project of "basis pricing" of the exchange.

The so-called basis pricing is essentially spot trade, and its spot pricing is based on futures and basis prices, that is, "spot price = futures price + basis", rather than buy it now price.

"On the one hand, it helps the value discovery function of coke futures, accurately reflects the supply and demand of coke market, and finally realizes the accurate pricing of coke. On the other hand, through the popularization and promotion of innovative trade mode in the black industry chain, we can realize the stable operation of the industry, smooth the operating profits of enterprises, and enhance the anti risk ability of cyclical enterprises Said the Xuyang group.

Take the first quarter of this year as an example, on January 6, the coke 2105 contract was flushed to 3036 yuan, and then it began to fall back. After January 6, the spot price increased by 400 yuan for four rounds, namely, January 8, January 14, January 20 and January 28, respectively.

On February 23, the coke futures fell to 2600 yuan, and the spot fell by 100 yuan in the first round. As of March 12, the spot fell by 400 yuan, and the futures fell from the peak to 2260 yuan, with a drop of nearly 800 yuan.

Due to the early decline of futures, the market's expectation for coke spot has changed. Supply and demand are in tight balance before the Spring Festival, and the price drops sharply after the Spring Festival. The futures market reflects the future price trend of spot in advance, which undoubtedly provides effective guidance and reference for Xuyang group's product pricing.

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