Evaluation And Optimization Analysis Of Hedging Case In H Company

The price of non-ferrous metals has always been floated dramatically.In recent years,with the continuous development of the futures market,the application of hedging business becomes more and more extensive and mature in non-ferrous metal related industries.Most of mall and medium mining companies are also gradually exploring to use futures in price-risk management.Based on these background,H company decided to develop hedging to avoid the business risks caused by price floating in the non-ferrous metals market in 2016.This paper takes H Company as an example to introduce its background and scheme of hedging by using hedging tools in futures market.Combining futures market and spot market to analyze and evaluate the effect of using hedging tools,through the concrete analysis of the scheme,strategy and effectiveness of applying hedging tools in H Company,using hedging in H company could effectively avoid the risk of price-floating of some products,and also improve the system of risk management for H company.Therefore,through the analysis result of futures and stock combining,the application of hedging in H company is not so good.This paper explores the relevant reasons of this result,including the single hedging strategy and tools exposed by H company,the failure of hedging positions to cover risk exposures,the occupation of funds by selling hedging,the ambiguous attitude of management towards hedging and the failure of accounting treatment to truthfully reflect the hedging business,etc.And then coming up with some solutions,such as developing some base trade and silver and metal options to enrich hedging tools,the use of warehouse receipt pledge to alleviate capital,gold pressure,hedging business with new accounting standards,etc.At the end,it suggests that small and medium non-ferrous metal mining enterprises,such as H company,should carry out hedging in accordance with the actual situation of enterprises,and actively cooperate with futures companies,establish relevant risk management system,constantly optimize their business processes,and use hedging accounting to calculate profits and losses.Developing hedging business is an attempt for H Company to use financial tools to assist its development.With the deepening of China’s financial reform and opening up,the promotion of the real economy of financial services,and the acceleration of the internationalization of commodity futures and derivatives,active participation in the futures market will play a positive role in the strategic positioning and operational development of service companies.However,the academic research on hedging mostly focuses on the technical analysis level,while there are few case studies focusing on the practical application of hedging.On the one hand,this paper finds out the relevant problems in the practical application of hedging based on the application effect of enterprise H,and puts forward relevant optimization schemes for these problems.On the other hand,this paper puts forward some experience for reference for small and medium-sized enterprises in non-ferrous metal mining and selection industry to rationally avoid the operating risks caused by price fluctuations,so that they can find a new way of risk management from the futures market.