Core Insights - Copper prices have been rising significantly, with Shanghai copper futures surpassing 86,000 yuan/ton, impacting the manufacturing sector's cost structure [1] - Companies like Chint Electric are utilizing flexible hedging strategies to convert price volatility into cost reduction and efficiency gains [1][2] Group 1: Company Overview - Chint Electric is a leading enterprise in China's low-voltage electrical industry, covering various solutions including distribution, control, and power electrical systems, with a market presence in over 140 countries [2] - The company has adopted a procurement settlement mechanism based on "weekly average + floating trigger pricing" to manage the significant cost share of raw materials like copper and silver [2] Group 2: Hedging Strategies - Since 2021, Chint Electric has initiated hedging operations, initially focusing on futures and later incorporating options to create a more flexible risk management system [2][3] - The company implemented a "cash-settled put option" strategy to manage copper price fluctuations, allowing for cost optimization while maintaining the ability to purchase at lower prices if the market declines [3][4] Group 3: Results and Effectiveness - In Q3 2025, Chint Electric sold put options corresponding to 8,000 tons of copper, generating approximately 6 million yuan in premium income, while copper prices remained stable between 78,000 and 81,500 yuan/ton [4] - The use of options has allowed the company to optimize costs in a fluctuating market while retaining purchasing flexibility [4][5] Group 4: Lessons Learned - Chint Electric has identified four key lessons in utilizing options as a hedging tool: market analysis capability, prioritizing risk control, a gradual innovation approach, and the combination of tools for effective risk management [6] - The company emphasizes strict risk control, ensuring that option positions remain within hedging needs and that margin usage does not exceed 50% of total account funds [6]