(Reprinted from: Chinese Recycled Metals)
In order to focus on the development status of the recycled aluminum industry, we will introduce the cast aluminum alloy futures and option plans and listing process, analyze the latest developments in the spot trading market, and promote the high-quality development of the recycled aluminum industry. On May 20, the China Nonferrous Metals Industry Association and the Shanghai Futures Exchange jointly held a training course on cast aluminum alloy futures and options risk management in Foshan (the second phase). Liu Wei, vice president of the Recycled Metals Branch of the China Nonferrous Metals Industry Association, and relevant responsible persons from the Shanghai Futures Exchange Commodity Department 1 attended and delivered speeches.
More than 150 representatives from recycled aluminum alloy manufacturers, logistics and trading companies, well-known financial institutions participated in this conference. The meeting shared and exchanged in terms of the current status and development trend of the recycled cast aluminum alloy industry, cast aluminum alloy futures and option plans, and the construction of a hedging system. The successful holding of the conference is of great significance for discussing the development trends of the industry, in-depth understanding of cast aluminum alloy futures and options, and strengthening risk awareness.
Liu Wei, the Recycled Metals Branch of China Nonferrous Metals Industry Association, delivered a speech
Liu Wei pointed out in his speech thatIn 2024, the non-ferrous metals industry will be improving steadily, and the scale of the recycled aluminum industry will grow rapidly. From 2020 to 2024, the output increased from 7.4 million tons to 10.55 million tons, reducing carbon by nearly 600 million tons, becoming a new engine for green transformation in the aluminum industry. The listing of cast aluminum alloy futures is an important symbol of the development of my country's recycled aluminum industry. It will build a transparent pricing mechanism, provide risk management tools, and lead industrial upgrading with standardization. The entire industrial chain needs to adhere to compliance-based, industrial-financial coordination, deepen cooperation, and seize opportunities to create a new situation in the development of the recycled aluminum industry.
In his opening speech, a relevant comrade from the Department of Commodity 1 stated that, as an important national financial infrastructure, the Shanghai Futures Exchange will closely follow the “dual carbon” policy orientation, actively promote the listing of cast aluminum alloy futures options, and help the green development of the aluminum industry. The Shanghai Futures Exchange will continue to focus on the green and low-carbon transformation needs of non-ferrous metals industry, improve the futures and options product system, strengthen market services, inject new impetus into the high-quality development of the industry, and promote the upstream and downstream of the industrial chain to achieve sustainable development goals.
Liu Long, Assistant Secretary-General and Director of the Industrial Research Center of the Recycled Metals Branch of China Nonferrous Metals Industry Association, gave a special report
During the special report session, Liu Long gave a special report with the title “Current Situation and Development Trends of the Recycled Aluminum Industry”, introducing the development of the recycled aluminum industry. In 2024, the national recycled aluminum production reached 10.55 million tons, with a growth rate of 11%, and the domestic raw material supply accounted for about 85%. Although the recycled aluminum industry is currently in a period of rapid development, it still faces problems such as serious internal circulation in the industry and tight supply of raw materials. During the 15th Five-Year Plan period, the recycled aluminum industry will promote the high-quality development of the industry around keywords such as scale, raw materials, high quality and innovation.
Peng Yidong, senior manager of Shanghai Futures Exchange, gave a special report
Peng Yidong gave a detailed introduction to the development of my country's futures market and the business rules for cast aluminum alloy futures. The cast aluminum alloy futures to be listed will provide efficient price risk management tools for entities related to the aluminum industry chain. In the future, the Shanghai Futures Exchange will continue to enrich the futures product system, promote the high-quality development of metal futures, and help the non-ferrous metals industry make progress.
Special report on Jin Can, senior manager of the Futures Derivatives Department of Shanghai Futures Exchange
Jin Canjie introduced the cast aluminum alloy options business. In recent years, the Shanghai Futures Exchange has actively developed the options market, with 13 option varieties listed, with rapid growth in market size, and the trading volume and position volume in 2024 increased significantly year-on-year. Cast aluminum alloy options have the characteristics of a minimum change price of 1 yuan/ton, the contract month is set reasonably, the last trading day is close to the needs of the company, and the exercise price covers a wide range of rights. In keeping with listed option varieties in terms of margin and position limits, these rules are designed to better serve market participants and meet risk management needs.
Jiang Yuanxu, manager of Xiamen Jianfa Xinyuan Supply Chain Management Co., Ltd., gave a special report
Jiang Yuanxu focuses on enterprises using futures tools to achieve price discovery and risk management. First, take the 6063 grade aluminum alloy rod as an example, introduce the forward and reverse sleeve strategies, and analyze the operations and returns under different processing fees and futures prices. Then, the role of cast aluminum alloy ingot futures to avoid absolute price risks and discover prices will be introduced. Finally, the application situations and operating procedures for risk management of raw material inventory and finished product inventory, as well as the basis for judging opportunities, operating strategies and expected returns for positive and negative sets of opportunities, emphasize that value preservation and arbitrage should pay attention to safety margins, control warehouse volume and basis game risks.
Zeng Yong, deputy general manager of Jushen Logistics Group Co., Ltd., made a special report
Zeng Yongfa introduced the warehousing process of cast aluminum alloy, including basic planning preparation, cargo entry and exit process, futures warehouse receipt business, etc. It also explains the situation of Jushen warehousing, such as the establishment time, registered capital, business scope, qualifications and honors obtained, showing its professionalism and standardization in the warehousing field.
Zhang Jiangfan, head of the recycled aluminum department of Shanghai Ganglian E-Commerce Co., Ltd., gave a special report
Zhang Jiangfan analyzed the spot market from three aspects: supply and demand for cast aluminum alloys, ADC12 cost and profits, and subsequent markets. The content covers the pricing status of the recycled aluminum industry chain, the distribution of various links of the industrial chain, and the current status of the industrial operation. The cost profit situation of ADC12 industry and the impact of scrap aluminum on profits were also analyzed. Regarding the subsequent market, he said that the price trend of ADC12 in 2025 faces great uncertainty, and it still depends on the development of supply and demand and policies.
Special report of Huang Wangfang, a risk management researcher at Jinrui Futures Co., Ltd.
Huang Wangfang, with the title of “Futures and derivatives helps enterprises to abide and increase efficiency”, focused on futures and derivatives helps enterprises to abide and increase efficiency. First, we will introduce the details of cast aluminum alloy futures contracts, including trading units, quotation units, etc. Then, the risk exposure of each link of the recycled cast aluminum alloy industry chain is analyzed, such as the different price risks faced by recycled aluminum plants, trading companies, and downstream application companies. Then, the application of futures tools is explained, covering selling, buying hedging and basis management strategies, and the basic strategies of options, the applications of different option tools and over-the-counter derivatives are introduced, demonstrating the role of multiple tools in risk management.
During the exchange session, all parties involved exchanged on topics such as the development of the recycled aluminum industry, the impact of cast aluminum alloy futures on the industry, and the construction of a hedging system.
Zhang Lin, deputy secretary-general of the Recycled Metals Branch of China Nonferrous Metals Industry Association, presided over the morning meeting and thematic report
Zhang Lin, deputy secretary-general of the Recycled Metals Branch of the China Nonferrous Metals Industry Association, and Liu Long, assistant secretary-general and director of the Industrial Research Center, presided over the morning and afternoon report sessions respectively.
In the future, in order to continue to strengthen the company's understanding of futures, help companies avoid risks in futures, allow cast aluminum alloy futures and options to better serve enterprises, and further promote the development of the recycled aluminum industry. The Recycled Metals Branch of the China Nonferrous Metals Industry Association will continue to hold training classes in industrial clusters, and participants from all industries are welcome to sign up.
Information Editor: Yu Yulong