China invents 'mask option' to help manufacturers hedge risks amid epidemic

Source:Global Times Published: 2020/3/3 22:13:40

Residents pass by the Shanghai Futures Exchange, located in the Pudong District of East China's Shanghai Municipality, on August 1. Photo: IC

Futures trading institutions in China have invented new options including mask options, medical glove options and others, in a bid to assist epidemic prevention materials' producers in hedging risks amid the outbreak and relieve pressure on the producers brought by the surging prices of raw materials.

Futures agencies in China have been striving to support manufacturers to steadily resume production after the outbreak of the coronavirus, read an online statement from the China Futures Association (CFA) on Tuesday.

For instance, the price of one raw material for facial masks, polypropylene, has soared due to rocketing demand, so the "mask option" has become an effective tool to hedge against the rising prices for manufacturers, said the statement.

Other over-the-counter options have been invented as well, such as protection suit options, alcohol options and medical glove options.

Many risk management companies have provided free option products for the producers, which fully demonstrates the solidarity of the futures and spot markets to fight against the virus, the CFA noted.

A risk management company under Shanghai-based CCB Futures has provided a free call option to Shandong-based material company Dawn Group, which would guarantee the cost of 450 million disposable surgical masks or 100 million N95 masks, according to Futures Daily.

As of Monday, a total of 85 futures trading institutions in China have made donations of capital or emergency materials worth 37.15 million yuan ($5.32 million).

Global Times


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