Study On The Hedging Management Plan Of Western Mining Co.,Ltd

With the deepening of the integration of the global economy, the Chinese enterprises in the industries of low value-added productions meet more and more difficulties to ensure their meager profits, particularly due to the severe frequent fluctuations in commodity raw materials and finished goods prices. Frequently adverse change of prices and the RMB exchange rate fluctuations in the capital market greatly erode the profits of such enterprise. In this new situation, if the enterprises fail to take advantage of the assets hedging as a tool to lock in the cost or lock the sales price, the situation that the more production and the more loss may occur. In order for an enterprise to use hedging tools to lock cost or lock sales price, it has to have clear and correct transaction ideas in futures hedging market, witch is the hedging management program. This thesis takes the Western Mining Co., Ltd. as an example to investigate its hedging management program. Western Mining has several non-ferrous metal products such as copper, aluminum, lead, zinc in its hedging program. This company has not only long industry chain, but also long production cycle, from mining of the ore, smelting to the finished products and profiles. In order to prevent the price rising of raw materials, it needs to store the values of the purchased raw materials; it also needs to preserve the prices of its products in order to avoid the risk of falling prices. Hedging is a systems engineering project, in addition to take the preservation of the volume and the price into consideration, it must also consider the impact of economic environment factors, the entry basis of the hedging, and the risk management against inflation in the hedging process, as well as the assessment after hedging when hedging management ends. The hedge management of Western Mining covers a wide range, thus its plan can be helpful for other enterprises in the same industry. The first chapter of this thesis describes the goals and purpose of this thesis, as well as the significance of this study and its arrangements; the second chapter describes the basic theory of the Futures on goods, basic theory of hedging management, and the development of the domestic and foreign hedge management. The third chapter analyzes and discusses the hedging status and some existing problems in the Western Mining Corporation. The fourth chapter analyzes and investigates the hedging plan of Western Mining Corporation Limited. The fifth chapter depicts the implementation environment of the proposed hedging plan. The sixth chapter is the summary of the thesis and acknowledgement.