On August 21, 2018 China International Iron Ore and Coke Industry Congress "Combining Production and Finance to Build a New Iron Ore Industry Management and Investment System" in the same period of activities, OTC options became a hot topic. Some enterprises said that OTC options in the iron and steel industry chain enterprise application prospects are very broad, options for iron and steel enterprises in the spring is coming.
"At present, China's coal-coke steel industry is in the key stage of further deepening the supply-side structural reform. The environmental protection rectification and upgrading, the complex international trade environment, make the domestic and foreign economic situation complex and changeable. This is often the best time to seek development and transformation and upgrading. In order to boost the transformation and upgrading of entities, the majority of financial institutions should first transform and upgrade. Xu Weizhong, President of Huatai futures, pointed out in his speech.
In the process of transformation and upgrading, option products stand out and become more and more important wind control tools by the entity enterprises. According to reports, from January to July this year, Huatai futures over-the-counter business scale continued to grow, has reached 130 billion yuan, options business income exceeded 100 million yuan.
In recent years, the black industry chain is obviously divided among varieties, among which iron ore is the worst supply and demand situation in the black industry chain, the differentiation between different iron ore varieties is also obvious, lump ore, high-grade ore can still maintain good profits, while low-grade ore is struggling in the vicinity of the cost line for a long time.
Xie Zhaowei, general manager of Beijing Ruigu Black Industry Research and Investment Center, analyzed that under the pressure of environmental protection, high profits of steel mills continued, superimposed a new round of stricter heating season production limits, and high-grade ore maintained a strong premium. However, the elasticity of the ore is significantly weakened, and there is a lack of unilateral market drivers for the ore in the persistence of high profits at steel mills. Futures prices priced at mid-range prices tend to oscillate lower, but in view of the extrusion effect of non-mainstream mines during the price decline, it is difficult to sustain a unilateral decline in the market.
Under the weak market situation, the operating pressure of the iron ore trade industry is increasing day by day. Under the background of large fluctuation of black commodities and differentiation among varieties, the demand for OTC options is becoming increasingly strong.
The reporter realized that the special risk management advantages of options can cover the shortcomings of traditional futures instruments. Options have a non-linear profit and loss structure, which can effectively cut and combine risks and returns; they can achieve higher capital utilization efficiency, including clear capital occupation, higher yield, adjustable leverage of multiple factors; and more flexible fault tolerant space, that is to say, accurate, hold, but wrong. Options also create more diversified forms of profit, including directional trading, ready trading, volatility trading and arbitrage trading.
Therefore, the demand of real enterprises for options arises at the historic moment, and continues to rise. Taking hedging as an example, the core of futures hedging is to lock the price and pay the opportunity cost in a favorable direction, while the core of option hedging is to guarantee the price, pay the right fee and keep the change in a favorable direction.
Taking a supply chain financial insurance service as an example, assuming that the enterprise has a screw spot value of 50 million, the goods will be consigned to a certain platform, which will pay up-front payment at a value not higher than 80% (40 million) and then pay the remaining payment after the goods are actually sold. During this period, the platform will face a risk that the price falls by more than 20%. Under the new option model, the part whose value has fallen more than 80% is funded by Huatai Option Protection Platform. The investors need not worry about the default risk and the margin. The one-month option fee is less than 20 yuan / ton, accounting for only about 0.5% of the value of the goods.
Even by setting up a specific option mode, the cost can be further reduced. "We have just built three leading options for a large steel mill, and the cost has been greatly reduced." Huatai the Great Wall investment black business director Guo Junwen pointed out.
According to the reporter's understanding, at present, including large commercial banks, central enterprises, large multinational enterprises, insurance companies, fund subsidiaries, securities companies, listed companies, leading industry customers, traders and other participants in Huatai futures options business. The volume of transactions among industrial customers accounts for 92%.
Traders, as the most active part of the market, use option instruments in a large proportion, and traders have achieved good results in actively participating in OTC options. OTC options tools make their professional advantages in the industrial field better play, inspired by trade and commercial performance, and the enthusiasm of production enterprises to participate in significantly improved. Iron and steel enterprises and coke enterprises are representative enterprises.
