China Nonferrous Metals Magazine: Seminar on Futures Market Serving Copper Enterprises in Strengthening Supply-side Structural Reform Successfully Held

Updated on: October 24, 2017

Since the beginning of this year, the domestic and international economic and financial situations home and abroad has been complex and volatile, and the fluctuation of major commodity markets has intensified. Although remarkable achievements have been achieved for the non-ferrous metal industry to further the supply-side structural reform, the adjustment and optimization of the industrial structure still have a long way to go. 

Shanghai Futures Exchange (SHFE) and China Non-Ferrous Metals Industry Association Copper Branch jointly launched "Seminar on Futures Market Serving Key Copper Enterprises in Strengthening Supply-side Structural Reform" in Nanchang, Jiangxi Province on October 18, in order to study the future copper market demand, structural adjustment of the copper smelting industry, adjustment of the copper industry specifications, how copper futures companies use futures instruments to maintain values in the new situation. Hu Changping, Deputy Secretary General of China Non-Ferrous Metals Industry Association and Director of Heavy Metals Branch, attended the seminar and delivered a speech. Jing Dawei, Director of Non-ferrous Materials Division of Raw Materials Department of MIIT, gave a presentation on the standardized management of copper industry. Duan Shaofu, Deputy Director of Heavy Metals Branch of China Non-Ferrous Metals Industry Association and experts and scholars from International Copper Association and leaders of large-scale non-ferrous metals enterprises conducted a professional discussion on the ways of combining futures with spot goods in the future.

Hu Changping said that at present China's copper industry runs smoothly and its development has reached a new level, and it has already laid the foundation for leading the world's industrialization. For the key copper manufacturing enterprises, the futures market not only has important hedging function, but also can well discover and tap its own value in the futures-spot goods interaction. "I hope that the key copper manufacturing enterprises continue to learn from the experience in improving the effectiveness of production and operation, strive to strengthen the awareness of risk prevention and achieve greater economic benefits in the futures-spot goods interaction." Hu Changping said.

Standing on a new stage of industrial development, how does the copper industry regulate itself? According to Jing Dawei, in recent years, the Raw Materials Department of MIIT proactively carries out standardized management of the copper industry, has announced three batches of lists for enterprises in compliance with copper smelting industry specifications, and has played a positive role in promoting technological progress, improving the energy conservation, environmental protection and resource utilization efficiency, and standardizing the enterprise operation in order to innovate industry management, adapt itself to the needs of developing the copper smelting industry, collaborate to eliminate excess capacity and accommodate the new reform of the administrative examination and approval system. Thirty-one enterprises were announced in the first three batches with a total of 8.08 million tons of refined copper (corporate declarative capacity), and MIIT is currently undergoing the announcement for the fourth batch of copper smelting enterprise specifications. The enterprises in the list that are allowed to engage in processing some varieties of products allowed by the state take the list of standards as reference, and the specifications have been the reference basis for financing from stock market and bank loans.

At present, the economy of China has been generally smooth and made progress and the foundation is not yet stable. The supply-side reform has achieved initial success, and changes are taking place in the new and existing kinetic energies of nonferrous metals industry. Duan Shaofu pointed out: "As a whole the market demand for copper is slowing down, the need for environmental controls is increasing and the cost of enterprises is going up. We should guide copper enterprises to invest scientifically, control their production capacity, enhance their core competitiveness, reduce their operating costs and expand the scope of application of copper. A variety of means shall be used to promote the sound development of the copper industry in China." ”

In the face of complex and volatile market, how can enterprises use the futures market to maintain value? Zhang Ronghui, Chief Analyst of Futures Department of China Minmetals Nonferrous Metals Co., Ltd., said: "If copper production, consumption, trade and investment enterprises want to use futures to control the risks and realize value preservation and appreciation, they must fully understand the operating conditions and needs of the enterprises and set up complete and strict trading rules and regulations, establish professional trading teams, maintain complete and smooth futures and spot transaction channels, build good reputation and capital guarantee systems and develop efficient hedging strategies based on the market and their own circumstances in order to effectively achieve risk prevention and control as well as value preservation and appreciation.”

"Seminar on Futures Market Serving Key Copper Enterprises in Strengthening Supply-side Structural Reform" is a beneficial attempt of SHFE and China Non-Ferrous Metals Industry Association Copper Branch in combining production and financing and serving the real economy with the aim to establish interaction platform between China's non-ferrous metals industry and the futures industry, which facilitates futures-spot goods convergence and common development and has been widely recognized by the futures and spot industries. This seminar focuses on such topics as analysis and outlook of the non-ferrous metals market, China’s non-ferrous metals industry in the supply-side reform, non-ferrous metals futures serving real economy. And representative enterprises and industry experts from International Copper Association, Antaike, GF Securities and other non-ferrous metals industries home and abroad were present at the seminar.