Research On The Hedging Strategy Of S Cement Company

Hedging is an effective way to hedge the economic risk of the entity.Especially,in the situation when global economic keep downward while domestic economic growth keep slowing down,hedging has become an important way to balance business risk for many enterprises.Twenty-sixteen is an important year for China to promote the policy of"delete three,reduce one and supply one"vigorously.The traditional high energy consumption industries such as steel,coal and cement have become the key targets of the"production capacity delete"policy.By the influence of this policy,the coal production fell down and the coal prices increased.Because the cement industry does not belong to futures variety,therefore,the coal futures,which could affect the cement production costs,could be a new choice for entities to solve crisis.China is the largest coal producer and consumer country in the world.Thermal coal occupies an important position of the energy structure of China.With the active promotion in the industry,thermal coal future successfully public listed in Zhengzhou Commodity Exchange on 26^th September 2013.Following the downturn of thermal coal spot market,futures as a tool to hedge market risk for the around turn,provides a new risk-averse approach.Listing of thermal coal futures successful perfects the thermal coal market system in our country and brings to the coal enterprises another method of price and risk aversion.Also it might ease the long time situation of"coal can't completely linkage"and optimize the thermal coal price formation mechanism.This paper states from this point of view and selects the S company as a case to study how the cement industry using coal futures to hedge risk.This paper is divided into seven chapters.The first chapter is the introduction,mainly introduces the background,meaning,research ideas and structure of this paper.This chapter plays the main role of this paper as it clarifies the thinking and path of this study.The second chapter introduces the relevant theory and research review,by summarizing the relevant theory of hedging first,and then pointing out the focus of this research.In addition,this chapter introduces the research situation from the domestic and foreign aspects to find out the innovation and shortcomings,including the basis of hedging,hedging ratio improvement and promotion and so on.The third chapter is the analysis and reference of the experience of hedging in developed countries.The analysis of the hedging experience in the United States,Britain and Japan,could provide advanced experiences including cultivating the main body of the transaction,regulating the trading mechanism,improving the external environment and other aspects.Additionally,it also analyzes several typical enterprises in Guangzhou,such as Zhizhiyuan,China Aviation Oil and State Reserve Copper.The fourth chapter is the analysis of the current business situation,which analyzes the industry and market situation,provides some useful material for followings.The fifth chapter is the asset analysis and hedging market selection,mainly focusing on the coal futures varieties,contract selection and dynamic coal futures market characteristics,as well as a basis for the design.The sixth chapter is the design of hedging scheme.This chapter starts with an analysis of the market risk of cement enterprises,and ends with a summary of the preparatory work of hedging.The last chapter is the conclusion part,which is also the core part of this paper.Followed by a detailed statement of implementation of hedging,the last chapter summarizes the research and prospects the future research.