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The China Iron and Steel Industry Association (CISA) and Dalian Commodity Exchange (DCE) jointly held the “2018 Workshop on Basis Trading & Derivatives Business for Iron and Steel Enterprises” on May 10-11. CISA Vice Chairman Chi Jingdong, DCE Vice President Zhu Lihong, and nearly 100 persons from iron and steel enterprises and risk management subsidiaries of futures companies from all over the country attended the workshop.
Zhu Lihong said in the speech that DCE has fully realized the importance of using the futures market to manage risks by industry enterprises during the past over 20 years in serving the industry: possessing the way and mechanism of using futures will help to promote the production and operation of an enterprise. Judging from international experience, basis trading and over-the-counter (OTC) derivatives business are closely related to the production and operation of an enterprise, and they are important methods for enterprises to use the futures market to manage risks.
She said that the official ushering-in of overseas traders of iron ore futures on May 4 is of great significance to enhance the representativeness and influence of iron ore futures price and promote basis trading in international trading. In the future, DCE will continue to promote basis trading and OTC derivatives business, thus providing the iron and steel industry with more professional services. It will also enhance the influence of the Chinese iron and steel industry in global trading while encouraging industry enterprises to participate in and increase the operation quality of the futures market, thus boosting the development of the iron and steel industry.
Chi Jingdong said in the speech that in recent years, the futures market has kept developing, the degree of iron and steel enterprises participating in futures trading has kept increasing, the functions of the futures market has been increasingly displayed, and the iron and steel enterprises have shown great attention and active participation. All these have played a positive role in the unity of the value and price of iron ore spot market.
The official ushering-in of overseas traders of iron ore futures is expected to set up a fairer and more reasonable iron ore pricing system and facilitate the promotion of basis trading across the world. And the iron and steel industry is looking forward to establishing a fair and more reasonable iron ore pricing system through the iron ore internationalization.
Relevant experts on futures and spot markets have been invited to the workshop to introduce the pilot of basis and OTC options, the raw materials basis purchasing and hedging of iron and steel enterprises, the trading strategy and risk control of OTC derivatives, and many other topics. The workshop will help enterprise to learn relevant professional knowledge on basis trading, options and risk control, urge relevant employees in the iron and steel industry to enhance their ability of making use of futures and derivative instruments, and promote the popularization and application of basis trading in the iron and steel industry.
