Under the goal of "double carbon", the black industrial chain is facing a change. experts suggest that futures should become an indispensable link.

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Black industry chain is an important part of the national economy. Since last year, black commodity prices have experienced great ups and downs, which has had a great impact on the development of the whole industry. How to make good use of the futures market and carry out risk management has become the focus of the whole industry.

On December 5, at the black sub-forum of the 17th International Futures Conference, sponsored by the China Futures Industry Association, Shenzhen Local Financial Supervision Administration and Shenzhen Futures Industry Association, co-sponsored by large merchants and hosted by South China Futures, participants said that with the continuous integration and development of the spot and futures markets of the black industry chain over the years, derivatives have had a profound impact on black variety pricing and spot trade. With the help of derivatives tools, many enterprises overtake at the corner in business transformation and model innovation, hoping to promote the overall development of the service industry while managing their own risks.

Black industry: facing the changing situation and seeking transformation

In the second half of this year, the CPC Central Committee and the State Council issued the "opinions on the complete, accurate and comprehensive implementation of the new development concept to do a good job of carbon neutralization". The "double carbon" strategy and goals have become important factors affecting the development of various industries. The carbon emissions of the black industry account for 15% of the country's carbon emissions. as a traditional high energy consumption industry, under the national "double carbon" goal, it will usher in new opportunities and challenges. Energy consumption and emissions will to a large extent determine the cost and competitiveness of enterprises in the future. it will also force the black industry to develop low-carbon technology and process innovation.

The reporter learned at the meeting that at present, most iron and steel enterprises in Europe, the United States, Japan, South Korea and other developed countries are actively setting low-carbon development goals and putting them into action, and domestic iron and steel enterprises are also speeding up the research on the cutting-edge technology of low-carbon development. and formulate corresponding low-carbon development plans. "although in the long run, low-carbon capacity will have the opportunity to develop, reduce operating costs, improve sustainable competitiveness and increase profitability. But in the short term, the 'double carbon' goal will bring operational pressure to iron and steel enterprises, reduce production, increase the input cost of energy and environmental protection, and compress profit margins. " Cai Yongzheng, director of Jiangsu Fushi data Research Institute, said.

It is understood that the focus of the policy in the second half of this year has shifted from "eliminating production capacity" to "suppressing production". The annual crude steel output in 2020 is 1.065 billion tons. The output of crude steel will increase greatly in 2021, and the carbon emission reduction will be increased. Crude steel output in the first half of 2021 is 563 million tons, then crude steel production in the second half of the year must be controlled at 501 million tons, down 61 million tons from the first half of the year, and iron ore demand will drop by about 76 million tons. The average monthly output is controlled at 83 million tons.

Cai Yongzheng said that the policy focus of the iron and steel industry in the second half of the year shifted from "capacity removal" to "production pressure", superimposed by the impact of power cuts brought about by the energy crisis, and production control efforts in the second half of the year exceeded expectations. In fact, the downstream demand in the second half of the year is weaker than that in the first half of the year, and production control is also in line

It is worth noting that China's steel production accounts for more than half of the world's total steel output, but there has always been a regional imbalance between supply and demand, leading to the long-term large-scale transfer of resources, such as the southward movement of northern timber, which has also increased energy consumption to a certain extent. From 2019 to now, the arrival volume of "Yangtze River Delta + Pearl River Delta" accounts for 78.3% of the total, and these two regions have always been the first choice for Beicai to arrive.

Under the background of "double carbon", the capacity will be replaced continuously from 2022 to 2025, and the approval of production capacity may be stricter. Access to the coking industry will be more stringent, coke capacity in the current round of capacity replacement may be difficult to continue to grow space. "in the future, coke production will be suppressed by downstream demand." Cai Yongzheng said that in the context of carbon front and carbon neutrality, the energy dual control policy has become more stringent, and the coking industry, as a "two-high" industry, will be more difficult to approve new coking capacity in the future, and the production progress of the new capacity may be further slowed down.

It is understood that the total demand for crude steel will fall at a high level during the 14th five-year Plan period. Under the background of double carbon, iron and steel as a key energy consumption industry, policy production control and environmental protection requirements will be continuously strengthened, the hot metal production space will be compressed, and the total coke demand is expected to decline by more than 20 million tons during the 14th five-year Plan period. The main ways for iron and steel enterprises to achieve "carbon peak" and "carbon neutralization" include increasing the proportion of crude steel in short process, increasing ore grade and reducing fuel ratio, which will affect coke consumption.

In fact, the output of scrap resources will reach 250 million tons in 2020, which will exceed 300 million tons in the next few years. Therefore, China has entered a period of large-scale application of scrap, with the increase of the proportion of short-process steelmaking, the demand for coke will decline.

Futures market: help black enterprises to transform and upgrade

Wu Yajun, secretary general of the China Futures Industry Association, said at the meeting that the implementation of the "double carbon" goal and plan will inevitably have a profound impact on the prices of related varieties in the black industry chain. it is necessary for enterprises to make full use of futures and other derivatives to do a good job in risk management.

According to reports, in the past few years, China's futures market has adhered to the development concept of seeking progress in the midst of stability, adhered to the development road of marketization, legalization and internationalization, and has made gratifying achievements in serving the real economy. Nowadays, more and more enterprises realize the necessity of risk management through the futures market.

Lao Hongbo, deputy general manager of Hangzhou Heat Union Group, said that most of the research on traditional physical enterprises revolves around production and operation, focusing on improving production processes and improving production efficiency. On the other hand, industrial companies tend to make continuous research and judgment on the relevant commodity prices, joining more institutions to participate in price research, discovering prices and trading prices. Industrial companies see and seize the prices found in the derivatives market, formulate corresponding derivatives strategies, and solve the problems of "can't do" and "can't do well" in the production and operation of enterprises. Usually, the focus of the industrial enterprise research is the cash basis, which can help the industrial company to expand the profit realization channel. Industrial companies have great advantages in basis research and basis realization, and the efficiency of basis research determines the effect of the use of derivatives in industrial companies.

Lao Hongbo believes that derivatives help the upstream and downstream share the profits and losses caused by price fluctuations, smooth the uncertain risks faced by the operators of the industrial chain, and separate the price flow of commodities from logistics by providing basis services. the relationship between the upstream and downstream of the industrial chain has changed from a traditional opposing game to win-win cooperation. Service companies and customers go deep into each other's ecosystem, serve each other's customers or jointly serve third parties, and continue to provide customers with personalized, integrated and efficient comprehensive solutions. and through derivatives tools to expand the service capacity in the future scene, docking with the customer's linear production and operation to realize the realization of the scene.

Geng Haobo, deputy director of the investment department of Nanjing Iron and Steel Co., Ltd., believes that the traditional management thinking of the manufacturing industry could not keep up with the changes in the market. The traditional procurement and sales model, as well as upstream and downstream cooperation relations are facing new challenges. On the basis of years of continuous participation in the futures market, this year, the company opened the era of "cash risk management 2.0" to cope with new changes in the industry. The application of futures and derivatives tools is used for risk management in the short term, as an important supplement to spot procurement and sales plans in the long run, and an indispensable link in the production and operation of steel mills.

Futures company: innovate business model and improve service level

Wu Yajun said that due to the impact of the epidemic, the volatility of commodity prices has increased in the past two years, the demand for using futures and other derivatives for risk management has increased significantly, and the futures market has ushered in an important opportunity for the rapid development of Synchronize. By the end of the third quarter, the scale of rights and interests in the futures market reached 1.189397 trillion yuan, an increase of 61.65% over the same period last year, and the market scale expanded steadily.

He pointed out that the black industry, as an important industry in the development of the national economy and the main sector of the futures market, has also made considerable progress in recent years. With the increasing volatility of commodity prices and the increasing demand for risk management, the price discovery and risk management functions of black futures such as coal, coke, ore and steel continue to play. At the same time, with the in-depth development of forward, ownership, swap and other multi-level derivatives market, the depth and breadth of risk management of black industry has been further improved, which has greatly promoted the optimization and upgrading of the business concept and model of black industry chain. in the production and sales pricing model, supply chain management, customer relationship management, rich business means and other aspects have also been further deepened and improved.

Futures companies and their risk management subsidiaries and other trading service institutions are also gradually ploughing the black industrial chain, innovating and launching new service models such as authorized trade and futures price stable orders, so as to better lead and serve the high-quality development of the black industrial chain. In the future, futures companies, as intermediary service institutions, should, combined with the current new situation, deepen the research on relevant listed futures varieties and industrial chains, constantly innovate products and service models, and give better play to the advantages of financial specialty and risk management. lead, promote and serve the black industrial chain enterprises to make rational use of derivatives, make a positive contribution to ensuring supply and stable prices, and serve the national green and low-carbon transformation strategy.

"at the same time, in the case of increased risk of market volatility, it is suggested that physical enterprises should maintain the original intention of risk management, scientifically and rationally use futures and derivatives tools, manage the risks in both futures and cash markets, and not speculate blindly." Wu Yajun said.

As an important participant in the market, South China Futures has long attached importance to the development of risk management business and continued to innovate in the service model. "We vigorously develop weighted trade, increase embedded option strategy from single option to multi-option strategy, accumulate options and other complex option strategies, and carry out warehouse receipt pledge services with commercial banks to establish a closed loop of risk management for banks. It also enables industrial customers to make use of non-traditional credit methods to carry out warehouse receipt pledge financing, solve capital problems, connect the entire industrial chain through supply chain finance, and provide comprehensive risk management services such as warehouse receipt financing, warehousing management, price management and so on. " Luo Xufeng, chairman of South China Futures, said that in the future, South China Futures will also continue to do a good job in ensuring and stabilizing commodity prices, give full play to the function of the futures market in serving the real economy, and promote the high-quality development of the black industry chain.