Shangwei Co., Ltd. Plans to Conduct 500 Million Yuan Copper Futures Hedging Business to Lock in Raw Material Cost Volatility Risk

Shangwei Co., Ltd. (Stock Code: 603333) announced on March 16th that to hedge against the risk of fluctuations in the price of main raw material copper, the company plans to carry out futures hedging business in 2026. The maximum margin used is expected to be 150 million yuan, with a contract value limit of up to 500 million yuan on any trading day. The proposal has been unanimously approved by the 8th meeting of the company’s 6th Board of Directors and still requires approval from the shareholders’ meeting.

The announcement states that as a high-end special cable manufacturer, copper accounts for a significant portion of the company’s production costs. To mitigate the impact of raw material price fluctuations on operating performance, the company plans to use futures market hedging to lock in procurement costs and stabilize product profit margins.

The company states that this hedging business will adopt a “spot price + futures lock-in” combined strategy, strictly following hedging principles to ensure that futures positions match actual production needs. Based on feasibility analysis, this business will help improve the company’s ability to withstand raw material price volatility and does not harm the interests of the company or shareholders.

Regarding potential risks such as price fluctuations, policy adjustments, and liquidity shortages in the hedging business, the company has established specific risk control measures, including: developing a sound hedging management system, strictly controlling the scale of funds, setting up dedicated risk control positions, conducting regular supervision and audits by the legal and audit departments, and strengthening professional training for staff.

In terms of financial treatment, the company will apply hedge accounting in accordance with relevant provisions of the “Enterprise Accounting Standards” for qualifying hedging transactions, categorizing them as fair value hedges and cash flow hedges, and will continuously evaluate hedge effectiveness.

Market analysts point out that recent copper prices have become more volatile due to global macroeconomic factors and supply-demand relationships. Shangwei Co., Ltd.'s move is beneficial for smoothing cost fluctuations and enhancing operational stability, especially for cable manufacturing companies with longer order cycles. The actual effectiveness of this business will depend on the company’s execution of hedging strategies and market judgment accuracy.

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