Research On Hedging Strategy Of Copper Futures In J Copper Company

Affected by the new crown epidemic in 2020,the bulk commodity market experienced a fierce resonant plunge in March and then continued to rise for nearly a year.As non-ferrous companies usually have the characteristics of long production cycles,low profit margins,and high dependence on raw materials,the large fluctuations in commodity prices have brought huge challenges to the production and operation of non-ferrous companies.According to data released by the Bureau of Statistics,affected by the epidemic in 2020,enterprises above designated size in the non-ferrous metal industry will achieve operating income of 5.5606 billion yuan,a decrease of 70 billion yuan from 2019;there are 1541 loss-making enterprises,accounting for about 21% of the total number of enterprises.,A slight increase from previous years.Therefore,as a non-ferrous company,how to make good use of financial derivatives to hedge the risk of price fluctuations under the background of increasingly frequent commodity price fluctuations has become a very meaningful topic.This article combines the hedging business situation of J Copper Smelting Company to carry out research.First,through the correlation analysis of the Yangtze River spot copper price and the futures copper price,it proves the feasibility of using the futures market to hedge the risk of price fluctuations.Secondly,according to J company's business characteristics,analyze the various price risks it faces in the industrial chain.Then combined with the hedging case of J company,introduced various types of hedging strategies.In order to prove the effectiveness of company J's hedging strategy,this paper compares the volatility of J company's net profit with the simulated net profit volatility that is not affected by financial derivatives,and finds that company J has effectively reduced profits through hedging.Volatility.Finally,this paper points out the difficulties and existing problems in the hedging business process of J Company,and proposes optimization strategies.Through the analysis and research of this article,we can draw the conclusion that: Company J has hedged part of the price fluctuation risks faced by its production and operation activities by using financial derivatives hedging,and its hedging strategy has certain reference significance for other non-ferrous companies.