China-based Maanshan Iron & Steel plans to hedge 400,000mt of scrap steel and 600,000mt of steel products in 2020. Maanshan’s board approved its annual hedge plan for the year, last week.
Major commodities consumed and produced by the company will be hedged in the futures market. Maanshan plans to hedge 1.2mn mt of iron ore, 240,000mt of coking coal, 120,000mt of coke, 400,000mt of scrap steel, 28,000mt of ferroalloy and 600,000mt of steel products. The company’s board has approved an initial deposit of CNY100mn for standing futures.
Early in January, the company had announced that its net profit for 2019 will slump by 81.27pc or CNY4.83bn ($686mn) to CNY1.113bn from CNY5.943bn in 2018. Maanshan cited overcapacity and a subsequent reduction in steel prices, along with a rise in iron ore, scrap and coal prices, as the major factors impacting its profit margins.
In the first half of 2019, Maanshan produced 8.74mn mt of pig iron, 9.48mn mt of crude steel and 8.91mn mt of steel, down by 4.5-6.5pc compared to the prior year period, as a result of an overhaul to the company’s 2,500-cubic-metre blast furnace from Jan-Feb 2019.