Enterprise Futures Hedging Risk Management -Take the Qingshan Holdings’ Nickel Futures Incident on the LME as an Example

Abstract

When conducting international commodity trade, companies have to face changes in the prices of raw materials and finished products. Particularly in the context of a volatile international situation and increasingly complex geopolitics, enterprises are often inclined to engage in hedging activities to mitigate price risks. Establishing and improving risk management in hedging to promote enterprises’ smooth trade business is significant. Good risk management can ensure the long-term and stable development of enterprises. This paper conducts a case study through the March 2022 nickel futures price surge event on the London Metal Exchange. Through the huge loss of Tsingshan Group in the transaction, the cause of the event and the corresponding suggestions are put forward. The causes of the problems are analyzed from the macro-environmental and micro factors of the exchange and the enterprise, and the solutions are put forward. This paper has a certain reference value for similar enterprises to improve their hedging risk management ability.