Research On The Application Of Hedging In Aluminum Production Enterprise

In2012, the capacity and production of China aluminum have almost taken50%of world amount, which has hatched the top place around the world for12years and constantly expand. However, headed by the real estate industry, the demand of China aluminum continues to slow. Owing to the expanding of production scale and sharp drop of consumption growth, the state of China aluminum over capacity is getting worse. Under this background, the fluctuation risk of domestic aluminum price grows. A Group is the second largest aluminum production enterprise in China. It has many famous electrolytic aluminum production factory, almost involving each link of aluminum industry chain. It is the research emphasis in this paper that how to guide enterprises to avoid the risk exposure of each production processed through a quantitative model and index for hedging, in order to promote the A Group aluminum effectiveness and scientific nature of hedging.First, this paper expounds the basic theory of hedging overview, mainly including basic concepts and basic knowledge of futures hedging characteristics, theory development and extension. These provide the theoretical basis of hedging program design for A Group.Second, the electrolytic aluminum is main business in A Group. The paper analyzes the influence factors of domestic aluminum metal, including cost, market share, financial policies, the difference of supply and demand and the impact of exchange rate, etc. And it explains that the aluminum enterprises how to reasonable avoid when they face the different risks. Third, in this paper, we analyze the necessity and feasibility of aluminum futures. It show that the enterprise have the condition to avoid price fluctuation through carrying out hedging operations in domestic futures market.Finally, this paper proposes the specific design of hedging for A Group, including three parts: one is the hedging process design, from preparation, operation to summary analysis. It describes the complete process of hedging. Secondly, it is the hedging specific design, including hedging scheme selection and determination of hedge ratio. Through the establishment of aluminum futures price forecasting model to build hedging operations strategy; at the same time, we compare different model to estimate the hedging effect of the hedging ratio to determine the optimal hedging ratio for A Group. The last part is the implementation of hedging. We verify the model of hedging operations strategy and the optimal hedging ratio by different data.To sum up, A Group could determine whether to hedge and the hedging quantity on the basis of the future probability of aluminum futures price rise and fall. At the same time, when the enterprises carry out short-term hedging, they could choose hedging strategy of static hedging ratio; while medium and long-term hedging operations, they could choose dynamic hedging strategy of hedging ratio.