At the 2020 (2nd) China Industry Expo New Materials Forum-China Automotive New Materials Application Summit held by SMM, and China (8th) Aluminum processing Industry chain supply and demand Trading Summit, and China (second) Copper processing Industry chain supply and demand Trading Summit, Liu Xiaolei, Director of the Big data Department of Shanghai Nonferrous net Information Technology Co., Ltd., explained to you the relevant contents of long order signing model and hedging composition. The hedging strategy of aluminum enterprises in the second half of the year and the fundamentals of aluminum industry in 2020 are analyzed.
Long order pricing of raw materials for aluminum processing enterprises
Liu Xiaolei introduced the SMM spot aluminum ingot average price / futures average price / spot price, said that based on the reference spot price of raw materials procurement to avoid the risk of futures and spot price fluctuations, at the same time, through futures hedging tools, hedging in the inventory of raw materials and finished products, in order to obtain the fixed processing fee profits of aluminum processing enterprises.
Why do aluminum processing enterprises choose SMM spot aluminum ingot price?
SMM spot aluminum ingot price is announced free of charge to the whole society at 10:15 every working day, website reference: www.smm.cn; www.metal.com;SMM spot aluminum ingot price real feedback transaction price of the day, followed by full-time analysts through the certification of IOSCO international institutions.
Save transaction costs: reduce the time period of bargaining between buyers and sellers
Avoid credit risk: SMM, as a third party, does not participate in the transaction. SMM spot aluminum price gives real feedback on the actual trading situation in the spot market, and is regulated by IOSCO at the same time.
The earliest feedback on the spot market of the day: SMM updates the online price at 10:15 every day, which is the first third party to announce the price in the market.
Professional analysis and research: SMM spot aluminum price is supported by a team of 7 full-time analysts and has a huge database support.
With regard to hedging risk management, Liu Xiaolei would like to introduce to you a few points:
Basis risk: the fluctuation of the difference between spot price and period
The concept of complete hedging: the proportion in the hedging process should be completely matched to avoid the expansion of risk exposure caused by speculative psychology.
Delivery risk: the substitution of delivery varieties is not consistent with the quantity.
Personnel operational risk: unclear decision-making mechanism, strict supervision of personnel operation and inadequate tracking of software and hardware
Margin risk: the enterprise should allocate the margin reasonably according to its own actual situation to avoid forced cutting of positions due to the lack of margin.
The cost of moving positions increases the lack of contract liquidity: for the positive market, aluminum processing enterprises in the process of buying and hedging for the positive market, the risk of price difference in the process of buying and hedging lies in the increase of shifting costs.
Carding the Price of Electrolytic Aluminum in the second half of 2020
SMM believes that the overall supply of electrolytic aluminum continued to maintain an upward trend in the second half of the year, the recovery of domestic aluminum consumption in the "post-epidemic phase" was stronger than expected, and the recovery process of overall consumption slowed down in the fourth quarter.
In terms of domestic inventory, the risk of electrolytic aluminum accumulation during the year is relatively small, and it is still possible to remove the inventory in the fourth quarter. On the one hand, although the new production capacity is on the rise, the overall output increment is relatively slow; the supply side of the original import window intermittently closed in the fourth quarter limited the scale of imported aluminum ingots; On the other hand, downstream consumption can still be expected. Aluminum processing consumption from October to December is expected to rise steadily, with annual consumption expected to be more than 3%. In particular, terminal sectors such as domestic construction, transportation, and durable goods have led to the pick-up of primary aluminum consumption, and make up for the gap caused by the decline in domestic aluminum exports.
Paying attention to the reversal of three conditions: the reversal of the internal and external ratio, the reversal of the domestic futures basis structure, and the reversal of the spot-to-futures upside structure will determine the main contradiction for the enterprise to enter the hedging cycle. In the short term, the above reversal conditions are still not available when the inventory is less than 1 million tons, and the actual reversal needs to pay attention to the point opportunity after the formation of the mismatch cycle of consumption and aluminum ingot supply.
Brief introduction of SMM Aluminum Industry Information products
China aluminum market research database contains a series of data from bauxite, oxidation electrolysis and downstream aluminum profiles, strip and foil cables, recycled / primary aluminum alloy production chain capacity, quantity inventory, order operating rate, etc., from aluminum raw materials, smelting and processing to consumer terminals, first-hand survey data have been continuously updated monthly in the past ten years, timely, accurate and effective feedback on the development and trend of the aluminum industry chain.
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