Coke futures change "Buy it Now" and "futures + options" hedging model upgrades

Recently, a reporter from "Securities Daily" found through interviews with industrial companies that in the next ten years, the coke derivatives market will surely introduce more new tools and new models, build a multi-level derivatives system with on- and off-market collaboration, and promote industry and finance.
Deep-level integration, stable and far-reaching in terms of serving the development of the coke industry chain and serving the national strategy.

Basis trading leads the pricing model

For a long time, coke upstream and downstream enterprises have adopted the traditional pricing method of "Buy it Now" to earn the price difference between production or purchase, sales, and end customers.

However, in the face of price fluctuations, the "Buy it Now" pricing method will appear "the more it falls, the harder it is to sell, and the higher it rises, the harder it is to buy.
" Recently, a reporter from the Securities Daily found in an interview that in the ten years since the listing of coke futures, the black industry chain has skillfully used futures tools to avoid risks, and some companies have continuously "upgraded" their trading and pricing models in the use of futures tools.

Basis trading is essentially a spot trade, and its spot pricing is determined based on futures and basis prices, that is, "spot price = futures price + basis", not "Buy It".

During the interview, the reporter found that some representative industrial companies are exploring a "basis pricing" model that conforms to the law of the development of the black industry chain.

Wang Baiqiu, deputy general manager of Beijing Xuyang Chemical Co.

, Ltd.

It is reported that Risun Group and Jinxi Iron and Steel have introduced the basis point price into the long-term cooperative trade, and made corresponding designs based on the characteristics of the long-term cooperative trade.

The basis trading is carried out through the futures disk pricing method, and the coke spot price model is promoted.

Thanks to the "enterprise risk management plan" developed by DCE for many years and the support and participation of the industry, more and more companies pay attention to the futures market, prompting the gradual change of the traditional "market on the go" and "Buy it Now" trading model, which helps To diversify and transfer risks to both sides of the trade.

"Futures + Options" dual insurance

In recent years, with the support of exchanges and futures companies, coke industry chain companies have explored the application model of option tools for managing inventory risks and stabilizing business operations.

Especially in 2020, companies will make full use of futures and option tools to be unique in risk management.
Advantages, through hedging, to a certain extent, help companies avoid the risk of price changes and help companies fight the epidemic and resume production.

Yang Qing, general manager of Galaxy Futures, told the "Securities Daily" reporter that in 2020, the company will serve a domestic steel mill using option tools to carry out coke inventory risk and complete 2 over-the-counter options transactions, with a total transaction volume of 10,000 tons, and a total of nearly 5 product cycles.

In September, it achieved the effects of reducing procurement costs and maintaining and increasing inventory value for enterprises.

"The most important thing for companies participating in OTC options is that when spot prices are rising, they use OTC option tools for hedging.

The option side can choose not to exercise, and it will not erode the profit of the spot side.

In Wang Baiqiu's view, the further use of derivatives such as options is helpful to business operations.

First of all, the introduction of commodity options in production and trade breaks the single profit model of traditional industries, enriches the production and trade strategies of enterprises, and improves the profitability of traditional enterprises.

　　Ten years ago, the world’s first coke derivative, coke futures, was listed on the market.
Many companies have witnessed the growth and transformation of coke futures over the past ten years.
Ten years later, coke on-site derivatives have matured and OTC business functions have begun to appear.
Carry more expectations and attention from the industry.

　　"In the future, companies in the coke industry chain need to pay close attention to the derivatives market, use derivative tools to manage risks for companies, and further maintain stable operations.
" A related industry person said that after years of market risk tests, industry chain companies' awareness of financial tools And the ability to use continues to improve.
DCE has built an all-round derivative hedging system and effective pricing tools that integrate futures and spot products, on- and off-exchange collaborations, and effective pricing tools for upstream and downstream enterprises in the industrial chain, which will deepen the service of the country’s "carbon peak and carbon neutral" strategy and serve " The high-quality development of the coke industry during the 14th Five-Year Plan period.

　　Our reporter Wang Ning

　　Transfer from: Securities Daily