Core Viewpoint - The company is a leading domestic manufacturer of special steel wire ropes, catering to various industries such as elevators, construction machinery, ports, marine engineering, and shipping, establishing a strong brand reputation in the steel wire rope sector [1] Production and Sales Situation - The company adopts a sales-driven production model, coordinating production and raw material procurement based on market orders [2] - The company has a robust annual order volume, with a production cycle of 40 days from raw material input to finished product output [3][4] - The average monthly raw material usage is 3,500 tons, with an annual usage of approximately 40,000 tons, and a delivery cycle of one week [3][4] - The pricing model for raw materials is based on "wire rod price + processing fee," referencing the benchmark price published by Shagang on the first of each month [3][4] - The finished product, steel wire rope, is priced at approximately 10,000 yuan per ton, with a monthly average sales volume of 4,000 tons, leading to an annual sales volume of 48,000 tons [4] Inventory Management - The company maintains a raw material inventory cycle of 30 days, corresponding to a stock of 3,000 tons, and a finished product inventory cycle of 80 days, corresponding to a stock of 10,000 tons [5][4] Risk Exposure Analysis - The company faces two main price risk exposures: rising raw material costs due to increasing wire rod prices and the devaluation risk of raw material and finished product inventories during price declines [6] Futures Hedging Strategy - In response to declining steel demand and prices, the company can implement futures selling hedges for its finished product inventory and buying hedges for raw materials during price rebounds [7][10] - The company is advised to use rebar futures for hedging due to the stable price difference with wire rods [10] Price Volatility Characteristics - Historical price trends indicate that rebar prices fluctuate significantly, typically within a range of 30% to 40% annually, allowing for potential profits of 500 to 800 yuan per ton if half of the volatility is captured [11] Futures Hedging Backtesting - Backtesting of futures hedging strategies from 2023 to 2024 shows a total capital usage of 16 million yuan, with cumulative hedging gains of 8.27 million yuan, resulting in a total return rate of 52% [13] Inventory Selling Hedge - The inventory selling hedge strategy is designed to minimize losses from inventory depreciation, achieving a reduction of 4.86 million yuan in potential losses during the hedging period [17] Raw Material Buying Hedge - The raw material buying hedge strategy is projected to increase profits by 3.41 million yuan, equating to an additional profit of 487 yuan per ton [19]