The Solution For The Hedging Of Copper Company X

Copper company X was born in the early reform and opening up, is an enterprise which it’s major assert has already thoroughly listed. It becomes a big modernized enterprise in nonferrous metals of China for the enterprise regards mining copper, purifying copper, processing and saling cathode copper, producing and saling the copper productions such as copper wires as the main business. In the past few years, the price of copper has fluctuated frequently. It has experienced ups and downs sharply in a short time. Therefore, how to manage the raw materials and products of price risk as well as lock in the products of costs and profits, have becoming significant issues of copper company X.The text, which is based on the practical requirement of hedging of the company and the practical situation of the market, analysing the business process of the company first. After the analysis, we designed relevant ways of buying hedge or selling hedge according to the various features of risk exposure. We also designed three specific operation methods. Comparing the pros and cons of each of the three methods, the company should choose one method with their own operating conditions and practical situations of the market.On account of strong practicalness with the peculiarity of Master of Finance (MF) of this selected title, to avoid it being too academic, charts and common language are encouraged to use instead of using tons of wordy sentences and complicated formulas. The data, which are used as supplement, are all the latest ones within2013years. It provides reference for copper company or other companies which require the same hedging, since much increase has made to the practicalness to solve the problem.