Sponsored by dah and undertaken by galaxy futures, the training of "dah enterprise risk management plan -- entering valin iron and steel group" online basis trading business was held recently. The reporter of futures daily learned that valin steel has been actively participating in the futures derivatives market since 2008, participating in the off-exchange option project of daqing iron ore and coke, as well as the basis trade of coking coal and coke, and has planned to participate in the basis trade of iron ore with the overseas mine vale this year.

At the same time, the reporter also learned that this year to the industrial development work proposed "quality and efficiency oriented, focus on the industrial development effect, improve the precision and depth of industrial enterprise service" the general idea and requirements. And the facing valin iron and steel group to carry out the basis of trade business online training, is dalian during the epidemic prevention and control according to the situation of black industry and enterprise needs, in terms of industry development of a new attempt, in order to meet the demand of enterprises, provide enterprises with accurate industry development services, and through measures such as stepping up efforts to promote the basis of trade business, continue to promote iron ore species "a complete two-way" strategy, and pricing center construction.

Dalian industry development, said an official with the department after much development in recent years, iron ore has become the first domestic futures, options and swaps tool is complete, the spot and futures markets, domestic and overseas market connected "a complete two-way" varieties, resolutely iron ore pricing center construction, to further improve price influence. Based on iron ore futures price basis trade way rapid development and application in the iron and steel industry raw materials procurement, domestic large steel mills and traders will gradually international basis sales daily trade as an important component, and actively promote in dalian, the domestic large steel mills with vale trial basis trade will be carried out formally, open the iron ore trade renminbi-denominated, settlement mode, further enhance China's influence in the international iron ore trade, better serve the RMB internationalization strategy.

The person in charge also said that the experience of the development of international commodity trading shows that the basis trade based on the pricing model of "futures price + basis difference" can effectively solve the personalized risk management needs of enterprises and avoid the impact of basis difference fluctuations on the hedging effect, so as to better play the function of futures pricing. Dalian will be on the basis of trade business training as an opportunity to integrate all resources, through the "dalian enterprise risk management plan" for valin group, such as iron and steel enterprises in more and more targeted risk management training and industry services, stable production and operation for the enterprise the escort, boost the healthy development of the iron and steel industry.

Yang xianghong, a member of the party committee and deputy general manager of valin group, said that since last year, the basis trade mode of iron ore has been gradually promoted in the market. Valin steel has actively learned from advanced enterprises and industry experts in order to better understand financial derivatives. In the financial derivative market of the black industry chain, more black varieties are gradually introduced, which have a growing impact on the real economy. As a real enterprise, it should actively explore the use of financial tools to stabilize enterprise production. From the perspective of valin, we should actively study the financial market and make more tentative participation in financial derivatives, so as to make better use of futures derivatives to strengthen the risk management of enterprise operation. At the same time, valin steel also needs to remain sensitive to new things, so as to better integrate financial derivatives instruments with the operation of real enterprises. Valin group hopes to maintain a long-term and effective communication, learning and exchange mechanism with the advanced enterprises and experts in the industry under the support of institutions such as dag.

Yang qing, secretary of the party committee and general manager of yinhe futures, said that after years of encouragement and promotion by dashang, domestic steel enterprises have changed from the traditional futures hedging model to the diversified risk hedging model, and have achieved good results in hedging business risks with over-the-counter options, basis trading, including rights trading and other tools. Because valin steel with vale plans to try to develop iron ore trade in the form of base price of almost, held the "dalian enterprise risk management plan - into the valin iron & steel" activity main purpose is to make the enterprise more in-depth understanding of the basis of trade patterns, and to learn from other enterprise the basis of good trade experience, better to carry out their own iron ore trade business basis.

In this training, a number of industry experts on how to correctly understand the basis difference, how to carry out the basis difference trade and other topics, the combination of theory and practice.

"In the process of corporate hedging, we often encounter fundamental risk." In the view of zhou weijiang, general manager of the bulk commodity department of galaxy futures, the basis will fluctuate with the market supply and demand, capital and macro expectations and other factors, and the problem of corporate hedging is the loss caused by the basis fluctuations. In fact, the understanding and use of derivative instruments by enterprises are evolving and developing. After the enterprise's awareness of the risk management of spot sales and procurement is enhanced, it starts to flexibly use the futures market on the exchange floor. When hedging and hedging, it will have some choices on the strong and weak varieties and the strong and weak contracts. At the same time, hedging enhances the concept of locking in profits, and is better at using basis changes to enhance returns.

However, in the process of applying basis difference, the enterprise may misunderstand the basis difference. Ding guoping, director of the raw material business division of zhejiang relianzhong supply chain service co., LTD., said at the training session that some enterprises will have problems such as unclear understanding of the delivery brand and the existence of reverse logistics delivery in the operation process. Some enterprises only pay attention to the basis difference, but ignore the variety basis difference and regional basis difference, it is suggested to increase the weight of the variety basis difference, regional basis difference.

In addition, the factors affecting the basis difference of the time period can not be ignored. Ding guoping believes that the level of profit determines the absolute value of basis difference, the variation trend of inventory consumption ratio and the length of delivery time determine the short-term variation trend of basis difference, while the comparison of delivery force and the quantity, quality and region of delivery warehouse receipt affect the convergence range of basis difference.

In the enterprise actual operation case, the futures daily reporter found that the laigang yongfeng and vale case is representative. According to li chao, general manager of international trade co., LTD., laigang yongfeng usually meets the demand for production materials through the long association and spot procurement, but when the spot gap emerged in late October 2019, the spot resources at the port were not sufficient. Because of the early involvement of laigang yongfeng in the futures basis and price point business, and has been using the basis trade mode for the procurement and trade of production materials, in order to solve the shortage of spot, laigang yongfeng through full communication with vale, decided to use the basis trade to purchase spot. In late October 2019, laigang yongfeng found that the basis difference between the Brazilian mixed mine and the I2005 contract of daexiao had been maintained between 155-160 yuan/ton. At this time, as the impact of the supply reduction caused by the dam break event in Brazil weakened, the basis difference was obviously on the high side, and the two parties signed the basis contract.

According to the contract between the two parties, vale conducted the seller's bidding on October 31, 2019, and laigang yongfeng also conducted relevant operations on that day. The difference is finally settled through the final RMB price per dry ton of iron ore in the daexi iron ore I2005 futures contract released at 15:00 on that working day.

Li chao said frankly, in the basic price operation, the buyer or the seller price should not be the basis of the trade between the two sides of the main contradiction, basis and the choice of subject matter to be carried out on the basis of mutual recognition. The signing of the basis contract enhances the participation of both parties. The signing of the contract is just the beginning, and the selection of the basis and price cycle should be suitable for one's own needs. According to li chao, the basis trade has great advantages for enterprise procurement, making the price point cycle more flexible, facilitating transactions and achieving win-win results. It also helps enterprises to realize risk prevention and control, reduce the risk of default, and increase the transparency of pricing.

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