Securities code: Baoshan Iron & Steel Co.Ltd(600019) securities abbreviation: Baoshan Iron & Steel Co.Ltd(600019) Announcement No.: pro 2022006
Baoshan Iron & Steel Co.Ltd(600019)
Announcement on launching financial derivatives business in 2022
The board of directors and all directors of the company guarantee that there are no false records, misleading statements or major omissions in the contents of this announcement, and bear individual and joint liabilities for the authenticity, accuracy and completeness of its contents Baoshan Iron & Steel Co.Ltd(600019) (hereinafter referred to as “the company” or “the company”) held the 10th meeting of the 8th board of directors on March 3, 2022, deliberated and adopted the proposal on the operation plan of financial derivatives in 2022 and the development of financial derivatives in 2021 and the proposal on new futures trading varieties and trading directions.
1、 Monetary financial derivatives
(I) transaction background
The company’s monetary financial derivatives transactions are aimed at the settlement exposure generated by the import and export business, the debt exposure formed by the low-cost foreign currency financing, and the structured financial products linked to financial derivatives to avoid the risk of exchange rate fluctuations.
(II) trading plan
In 2022, the company matched the terms of collection, payment or foreign currency debt, and carried out multi currency cross forward (currencies including RMB, US dollar, euro, Australian dollar, etc.) with a conversion limit of no more than US $12.16 billion, interest rate swap with a conversion limit of no more than us $3.42 billion, and structured financial products linked to financial derivatives with a conversion limit of no more than US $410 million.
2、 Commodity financial derivatives
(I) transaction background
The company’s commodity financial derivatives transactions are aimed at cost locking, profit locking or inventory hedging in actual operation to avoid the risk of price fluctuation of corresponding raw materials or commodities.
(II) trading plan
In 2022, hedge the main futures commodities involved in the company’s production and operation, and formulate the maximum hedging amount in 2022 according to a certain proportion of procurement or inventory: 8 million tons of iron ore, 2.2 million tons of hot rolling, 220000 tons of fuel oil, 3000 tons of nickel, 100000 tons of coke and 1.3 million tons of coking coal. Implement daily business hedging within this scope.
Securities code: Baoshan Iron & Steel Co.Ltd(600019) securities abbreviation: Baoshan Iron & Steel Co.Ltd(600019) Announcement No.: pro 2022006
3、 Risk response measures
The company does not carry out financial derivatives business for the purpose of speculation, strictly abides by the principle of hedging, and effectively prevents, finds and resolves risks from the aspects of organization, system process and risk control measures.
1. The company has formulated and continuously improved the measures for the administration of foreign exchange risks and foreign exchange transactions and the measures for the administration of commodity hedging business, established a sound organizational structure of monetary financial derivatives and commodity financial derivatives, standardized and rigorous the whole process of financial derivatives business, and strictly separated business execution from management and supervision.
2. The company strictly controls the matching of foreign exchange exposure or spot with derivatives in terms of type, scale and time, and formulates practical emergency response plans to deal with major emergencies that may occur in the process of trading in a timely manner.
3. The company establishes a dynamic and strict hedging evaluation system. The financial and audit departments conduct dynamic evaluation and audit evaluation on the process and results of hedging work respectively, and make a comprehensive report to the board of directors every six months. The financial and audit evaluation and monitoring system has played an important role in process control and operation norms.
4、 Opinions of independent directors
Independent opinions of the company’s independent directors on the development of financial derivatives business: after careful review of the company’s development of derivatives business, the company’s derivatives transactions are locked for the risk exposure in the actual operation, which is conducive to the company to avoid the risk of corresponding raw materials, commodities or exchange rate price fluctuation, and has formulated a practical emergency response plan, Timely respond to major emergencies that may occur in the transaction process, do not affect the daily operation and normal development of the company’s main business, and do not harm the interests of the company and minority shareholders. The company is approved to carry out financial derivatives operation within the scope authorized by the board of directors.
5、 Opinions of the board of supervisors
The board of supervisors of the company expressed the following opinions on the development of financial derivatives business in 2022: 1 The company carries out financial derivatives business according to market changes and the actual needs of production and operation, which helps to avoid the risk of price fluctuation of corresponding raw materials or commodities, avoid the risk of exchange rate fluctuation and ensure the normal production and operation.
2. The company has established and implemented effective internal control and risk control systems related to financial derivatives, which can effectively control the risks related to the company’s financial derivatives business.
3. The company’s conduct of this business does not harm the interests of the company and shareholders, and the review procedures are legal and compliant.
In conclusion, the board of supervisors approved the company to carry out financial derivatives business.
Securities code: Baoshan Iron & Steel Co.Ltd(600019) securities abbreviation: Baoshan Iron & Steel Co.Ltd(600019) Announcement No.: pro 2022006
It is hereby announced.
Baoshan Iron & Steel Co.Ltd(600019) board of directors March 3, 2022
