Research on Two-Way Hedging Strategy of Baosteel

DOI

10.2991/978-94-6463-036-7_8How to use a DOI?

Keywords

Hedging; Baosteel; Residual risk; Hot rolled coil; Iron ore; Futures

Abstract

The iron and steel industry is the core industry of the ferrous metal industry and its development is related to the steady state and growth of the economy. As a world-class iron and steel conglomerate, Baoshan Iron & Steel Co., Ltd. Imports, produces, and consumes large amounts of iron and steel products. However, at present, the tense international situation has affected the normal operation of the steel industry. The share price of Baoshan Iron & Steel Co., Ltd. Has declined at the beginning of 2022 with the decrease in net profit. In this regard, this paper uses literature research, case analysis, comparative analysis, and other methods, and combines the concept of hedging to design a strategy for the hot-rolled coil which has the greatest impact on the company's profitability. Then we use the hot-rolled coil and its raw material iron ore futures and spot prices to evaluate the effect of hedging and compare the profit before and after taking the strategy, whose results show that the strategy can increase the proportion of gross profit, proving that the strategy is effective. In addition, the residual risk generated by the strategy is analyzed and some corresponding measures are put forward to improve the original plan, improving the feasibility of the strategy. Finally, the method of hedging strategy of steel enterprises is summarized. Based on the current international background, this hedging strategy is beneficial to the development of iron and steel enterprises.

Copyright

© 2022 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Peihong Chen
AU  - Chenghang Jiang
PY  - 2022
DA  - 2022/12/31
TI  - Research on Two-Way Hedging Strategy of Baosteel
BT  - Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022)
PB  - Atlantis Press
SP  - 42
EP  - 51
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-036-7_8
DO  - 10.2991/978-94-6463-036-7_8
ID  - Chen2022
ER  -