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Markets // Market Analysis

Hedging benefits highlighted at ITRI China seminar

Tuesday, 25 April 2017

The ITRI 2017 tin market and futures hedging seminar was held in Shenzhen on April 20 and was strongly assisted and supported by Shanghai Futures Exchange (SHFE). Approximately 70 members from ITRI China's Associate Membership and the ITRI-IPC China Solder Technology Group (CSTG) attended the meeting. The seminar covered the outlook for the tin market in 2017 as well as discussion on China's tin futures market operation and development outlook, risk management of non-ferrous metals company through utilisation of the futures market.

Futures contracts have become an increasingly effective and accessible tool for Chinese companies to undertake hedging and risk management, particularly given the continuously increasing open interest and turnover of the tin contract on the SHFE. Mr Zhang Xuefeng from Shanghai Chaojin Investment Co. emphasised the volatility and unpredictability of non-ferrous metals market, suggesting to all companies present that they strengthen protection against cash flow risk through the rational use of the tin futures vehicle against the market background of frequently-changing prices.

Downstream consumer companies present said during the discussion that consumption has grown steadily in early 2017, with products becoming increasingly diversified in the direction of high-tech, high added value and tailor-made products, which have been gradually increasing in quantity. Upstream manufacturers mentioned that risk in the current market was increasing; Capital costs are relatively large, and products are becoming standardised. Upstream companies also stressed the importance of guarding against price risk through hedging.

ITRI 2017 Tin Market and Futures Hedging Seminar

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China ITRI

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