Guarantee for steady price

How to reshape the industrial chain and supply chain model of welded steel pipe to stabilize raw material supply and production and operation during market fluctuations? The futures market is a place to provide price signals and manage price risks for real enterprises. It can also serve as a platform for upstream and downstream enterprises to purchase raw materials and sell products. Making good use of futures tools can enrich the resources of spot trade and expand the purchasing and selling channels of enterprises.

According to the introduction, with the support of the exchange, relevant market institutions have launched a variety of business models to provide enterprises with hedging and supply protection solutions. Among them, Yinhe Futures and its risk management subsidiary Yinhe Deli provide iron ore rights trade for Tangshan Delong Iron & Steel, a subsidiary of Xintian Steel Group. When iron ore supply is tight and the price fluctuates, they help the steel pipe supplier to purchase iron ore at a price lower than that under the traditional way of trade, ensuring the supply of raw materials. Specifically, in early February this year, considering the strong demand for downstream infrastructure, iron ore after the Spring Festival is likely to rise, price fluctuations are strong, suggest enterprises to do a good job in advance of the procurement layout. Although the company has the desire to manage price risk, it does not have the team and experience to participate in derivatives trading. Galaxy Futures provides a procurement mode closer to the needs of enterprises, providing a 30-day forward sales quotation, and purchasing at a more intuitive and simpler fixed price under the price range.

This combination of future and present procurement mode of square steel pipe is to design the procurement strategy according to a certain price range in a certain period of time in the future, and gradually accumulate the small amount of purchases every day. Enterprises can choose to make a one-time delivery after the expiration, or a cumulative delivery of 10,000 tons. This will transform the traditional linear procurement mode of iron and steel enterprises into a more flexible price range procurement mode, resolve the pressure of traditional procurement, play the effect of risk avoidance and supply protection. Hollow section manufacturers can also directly deliver goods and receive goods through one-time delivery of futures or delivery of future cash, which is equivalent to the use of futures delivery to increase the way of spot purchase and sale. Between last year and the end of June this year, 28,100 lots, or 2.81 million tones, of iron ore futures were delivered month-to-month, according to exchange data.