What Is a Spot Commodity?

Commodity spot trading refers to a transaction method in which buyers and sellers come out of the demand for physical goods and the purpose of selling physical goods, according to the agreed payment method and delivery method, using the current market price in real time or in a short time .

Spot goods

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Commodity spot trading refers to a transaction method in which buyers and sellers come out of the demand for physical goods and the purpose of selling physical goods, according to the agreed payment method and delivery method, using the current market price in real time or in a short time .

Chinese name

Spot goods

Foreign name

spot commodity

Commodity category

Energy commodity basic raw materials and bulk agricultural products

Advantages

Relatively more stable price, fair and low risk

Profit model

Grasp commodity price trends, etc.

investment advantage

Continuous trading methods, complete trading varieties, etc.

Differences between spot and futures:

Futures trading is based on spot commodities, but the medium and long-term contracts are traded. Settlement and settlement are required at maturity, and contracts cannot be held for a long time. Another risk of medium and long-term contracts is the lack of fairness in the price. Before the settlement, speculation by institutions in the market can make futures prices out of the commodity market and bring unnecessary risks to investors. Futures investment thresholds are also relatively high. Generally speaking, at least 50,000 can be entered, and more than 100,000 funds can better control positions and resist the risk of short-term fluctuations. But the futures market is unpredictable and the risks are greater than the stock market. The spot market is fairer, the price is relatively more stable, it is not easy to be manipulated by humans, the risk is lower, and it can hold huge returns in the medium and long term like a stock when grasping the trend.

At the Bohai Commodity Exchange, traders and investors have a total of 9 profit models in the following four categories:

Grasp commodity price trends

Buy or sell exchange electronic contracts for profit

Investors or dealers can rely on their accurate grasp of the changes in the prices of commodities listed and traded on the exchanges, and first enter into spot electronic contracts. After the future price of commodities rises or falls, they can obtain profits through the transfer of electronic contracts.

1. Judge that the price of a commodity has fallen (sold)

A dealer judges that the price of a commodity listed and traded on the Bohai Commodity Exchange will fall in the future. First, the electronic contract for the commodity is sold on the exchange at a relatively high price. After a period of time, the price of the commodity will drop. The dealer buys the same amount of the electronic contract of the commodity at a relatively low price to hedge the electronic contract previously sold to obtain the profit brought by the change in the price of the commodity.

For example:

The spot coke price on the exchange started to fall after it soared all the way. Miss Liu expected that the coke price would continue to fall, so she sold 50 lots at the spot coke price of 2480 yuan per ton, and the subsequent coke price continued to fall. By 2075 yuan / ton, Miss Liu decisively made a profit. Then Miss Liu's profit is as follows:

Total profit: 2480-2075 = 405 yuan / lot * 50 lot = 20250 yuan

Handling fee:

Open position: 2480 * 0.0015 = 3.72 yuan * 50 lots = 186 yuan

Liquidation: 2075 * 0.0015 = 3.1125 yuan * 50 lots = 115.625 yuan

Total : 186 yuan + 115.625 yuan = 301.625 yuan

Net profit: 20250 yuan-301.625 yuan = 19948.375 yuan

2. Judging the price increase (buy)

A dealer judges that the price of a commodity listed and traded on the Bohai Commodity Exchange will increase in the future. First, the electronic contract for the commodity is bought at the exchange at a relatively low price. After a period of time, the price of the commodity rises. The dealer sells the same amount of the electronic contract of the commodity at a relatively high price to hedge the previously purchased electronic contract to obtain the profit brought by the change in the price of the commodity.

E.g:

The Libyan war broke out. Mr. Wang expected that crude oil would increase sharply due to insufficient supply in the international market. So he bought 100 hand-held positions at the current crude oil price of 5227 yuan / ton. When the Libyan war escalated and continued, the war led to a large number of Oilfield facilities and equipment were destroyed, and export volume plummeted. Insufficient international market supply and international crude oil prices soared. Mr. Wang's crude oil price on the Bohai Exchange also rose to 5,730 yuan per ton and closed positions. Then Mr. Wang's profit is as follows:

Total profit: 5730-5227 = 503 yuan * 100 lots = 50300 yuan,

Handling fee:

Open position: 5730 * 0.0015 = 8.595 yuan * 100 lots = 859.5 yuan

Liquidation : 5227 * 0.0015 = 7.845 yuan * 100 lots = 784.5 yuan

Total : 859.5 + 784.5 = 1644 yuan

Net profit: 50300-1644 = 48656 yuan

Locking expected profits through hedging operations

The fluctuation of commodity prices will bring operational uncertainty to the supply side or demand side of the commodity and affect the operating profit of spot production enterprises or traders. Traders of the Bohai Commodity Exchange can avoid operating uncertainty caused by fluctuations in commodity prices and obtain normal commercial profits through hedging operations on the Bohai Commodity Exchange.

3.Sell hedging operation

Commodity prices are in a downward trend. Commodity suppliers are suffering from the decline in product sales prices. The contracted purchase of raw materials and future market sales prices often appear upside down and bring operating losses. At this time, the company can The exchange carries out a sell hedging operation. For example, after a commodity trader signs a contract to import raw materials from abroad, he sells electronic contracts on the Bohai Commodity Exchange to lock the sales price of the commodity. When the price of the commodity drops in the future, he applies for physical delivery at the Bohai Commodity Exchange, or passes The trading platform transfers electronic contracts to achieve the purpose of hedging, selling goods to other demanders, and the sales price is still fixed at the original level to obtain the expected profit.

For example:

A steel plant signed a 100,000-ton rebar sales contract. At that time, the spot price of rebar was 2,000 yuan per ton. However, because of concerns about the future decline in rebar prices, the steel plant in order to avoid future price declines, resulting in The risk of loss is decided to carry out rebar hedging transactions on the Bohai Commodity Exchange. The trading scheme is as follows:

Bohai Stock Spot Market

Before completion; sell 100,000 tons of rebar spot price: 2,000 yuan / ton 2,000 yuan / ton

After completion: Spot price for buying 100,000 tons of rebar: 1,500 yuan / ton Selling price for 100,000 tons of rebar: 1500 yuan / ton

Result: 50 million profit and 50 million loss

In the end, the short-selling profit of 100,000 tons of rebar on the Bohai Exchange was offset by the loss of 100,000 tons of rebar. Steel mills have kept their production profitable without risk. Will not be affected by market fluctuations.

From this example:

First, a complete sell hedging actually involves two commodity transactions. The first order was an order for selling goods on the exchange, and the second was an order for buying goods that were held on the exchange's commodity market at the same time as the commodity was sold on the spot market.

Second, because the order of transactions on the spot commodity market is to sell first and then buy, this example is a sell hedging. Third, through this set of hedging transactions, although the commodity sales price has adversely changed for the company, the price has fallen by 500 yuan / ton, which has resulted in less revenue of 50 million yuan. However, the transaction in the spot market of Bohai commodities has been profitable. 50 million yuan, thereby eliminating the impact of adverse price changes.

Trade function:

When the rebar production is completed, the delivery declaration is made daily. If the delivery is successful, the rebar can be sold successfully. If it is not successful, the delayed delivery compensation fee of 0.04% / day can be obtained.

Value preservation function:

If the exchange's rebar prices fall, the mill can make physical delivery on the exchange. You can also sell rebar spot on other spot markets, and transfer the corresponding amount of electronic orders at the same time. The gain from the transfer of electronic orders will make up for the loss of physical sales.

4, buy hedging operations

Commodity prices are on the rise, and processing companies are suffering from the rise in raw material prices. The sales price of finished products that have been signed and the purchase price of raw materials in the future often appear upside down and bring operating losses. The purchase hedging operation performed.

Buy hedging example:

A large refinery has always had a stable customer base and signed a long-term supply contract, which requires at least 100,000 tons of crude oil, but due to intensified global inflation and insufficient international crude oil supply, international crude oil prices have started to climb. At that time, the price had exceeded 5,000 yuan / ton It is expected that it will continue to rise in the future. Due to insufficient reserves, the company is facing a situation of loss due to the increase in the cost of raw materials and the gradual reduction of profits. Therefore, it implements a buy hedging scheme at the Bohai Commodity Exchange.

as follows:

Bohai Commodity Exchange Spot Market Spot Market

Insufficient supply: order price for buying 100,000 tons of crude oil: 5,000 yuan / ton 5,000 yuan / ton

Resumption of supply: Order price for selling 100,000 tons of crude oil: RMB 5,500 / ton Buying spot for 10,000 tons of crude oil, price of RMB 5,500 / ton

Results: 50 million profit, 50 million cost increase

By buying hedging transactions on the Bohai Commodity Exchange, the company used the profit from the spot orders of the exchange to make up for the risk that the price of crude oil would still be high after the supply of crude oil was lost, after the crude oil supply was insufficient and rising all the way. Keep the cost firmly locked at 5,000 yuan / ton.

Arbitrage

Get stable profits with low risk

Commodities will maintain a reasonable spread between different varieties and different markets (considering freight, insurance, storage fees, interest on funds, risk conditions, liquidity, etc.). When the price of commodities deviates from normal levels, traders can buy and sell low. High, in the case of lock-in risks, to obtain stable profits.

5. Transnational domestic market arbitrage

The same commodity is listed in different domestic markets. Generally, the prices of commodities in different markets are basically the same or there is a reasonable price difference. When the price difference of the same commodity in different markets deviates from normal levels, traders can trade in the two markets. At the same time, buy and sell separately, two-way transactions, to achieve the purpose of arbitrage.

6. Arbitrage across international markets

Due to the distortion of exchange rates, time differences, and short-term supply-demand relationships in different markets, when the price difference of the same commodity in different international markets deviates from the normal level, the arbitrage purpose is achieved in the same way as in the domestic way.

7. Cross-varietal arbitrage

Due to similar uses or substitutability, some products are relatively related to each other, and their price trends are related to each other, and the market prices between them should maintain a reasonable spread. When the price difference between the two related products on the Bohai Commodity Exchange deviates from the normal level, the dealer can buy and sell the two products at the same time in the exchange market. After a period of time, when the price difference narrows, the transaction The merchant then carried out the reverse operation of selling and buying, respectively, for the purpose of arbitrage.

Profit from physical delivery declaration

Traders can flexibly use the Bohai Commodity Exchange's daily physical delivery declaration system to obtain reasonable deferred compensation fees.

8. Commodity manufacturing enterprises obtain reasonable deferred compensation fees through physical delivery declaration

Commodity manufacturing enterprises make declarations for physical delivery, and can obtain deferred compensation when their sales orders cannot be fully fulfilled.

9. Commodity-demanding enterprises obtain reasonable deferred compensation fees through physical delivery declaration

Commodity-requiring companies make physical delivery declarations, and can obtain deferred compensation when their purchase orders cannot be fully fulfilled.

Continuous trading

With the deferred delivery compensation system, traders do not need to pay or pay a small amount of deferred compensation fees to achieve the purpose of long-term positions, there is no danger of forcing positions, and they can follow the long-term trend to earn investment profits.

Practical two-way trading

Flexible two-way trading mode, you can buy up and you can buy down, the short market to buy short, the rising market to buy long. Without a bull-bear market, bull-bear markets have an opportunity to make a profit.

Generous trading time

At the Bohai Commodity Exchange, you can trade for 13 hours a day from Monday to Saturday: morning market 9: 00 ~ 11: 30, lunch market 13: 30 ~ 16: 00, night market 19: 00-03: 00

Efficient use of funds

T + 0 trading system, the funds can be used repeatedly within the day, and the transaction uses 100% margin to trade 100% of the value of spot commodities. Funds can be enlarged 5 times for operation and effective use to maximize profits.

Complete trading varieties

The main trading varieties of the Bohai Commodity Exchange are: petroleum (listed crude oil / PTA / polyester chips), metal (listed HRC / rebar western, wire, titanium, ductile iron), coal (listed coke, thermal coal) ), Agricultural products (big red star anise, wolfberry, caster sugar, cotton, corn)

Safe and fast fund management

The Bohai Commodity Exchange adopts a third-party depository mechanism to strictly guarantee the safety of investors' funds. The exchange has signed cooperation agreements with China Construction Bank, SPDB, Industrial Bank, Bank of Communications, China Merchants Bank, Industrial and Commercial Bank of China, Minsheng Bank, Agricultural Bank of China, China CITIC Bank and Ping An Bank, and the transfer of funds is convenient and quick. (The "Tripartite Fund Transfer Agreement" of China Construction Bank, SPDB, Industrial Bank, and Bank of Communications is provided by authorized service agencies. China Merchants Bank, Industrial and Commercial Bank of China, Minsheng Bank, Agricultural Bank of China, and CITIC Bank are required to obtain and fill in at bank outlets.

Meeting multiple trading needs

Spot transactions can meet personal investment needs, corporate delivery, and hedging and hedging needs.

The Bohai Commodity Exchange is the first domestic joint-stock commodity exchange under the supervision of the government. It is the first domestic stock exchange under the supervision of the government. Establish a market supervision and management committee, a commodity exchange under the direct supervision of provincial (ministerial) local governments. It is also the only spot commodity exchange in China. It has played an important role in stabilizing, centralizing, unifying and regulating the Chinese commodity market.

The Bohai Commodity Exchange and Bohai Commodity Trading are strongly supported and promoted by the central government and major mainstream authoritative media.

CCTV-2 "Trading Hours" has a column on "Bohai Commodity Exchange Listed Products Online" column every Friday from 9:00 to 9:30.

The First Financial News "Early Business Shuttle" broadcasts the "Daily Commodity Price and Short Comment" of the Bohai Commodity Exchange every morning from 8:00 to 8:30.

The "Early Financial Bus" is also broadcast or rebroadcasted at the corresponding time on Ningxia Satellite TV, First Financial Radio, and Oriental Finance (Digital TV).

Zhongquan Spot's daily early evaluation information will be posted on People's Online and announced in the financial calendar.

Why invest in commodities

The bull market is not the stock market or the bond market, but the commodity investment market. Smart investors will ride this bull in 10 years and set a record for return on investment! World Investment Master Jim Rogers.

In the negative interest rate era, inefficient investment and utilization of funds and wealth will continue to shrink unknowingly like water in cracked buckets. In the era of negative interest rates, the most effective and risk-averse are commodities and precious metals such as gold. Also in the period of political turmoil and financial market instability, commodities and precious metals remain the only destination for safe-haven funds. Precious metals show their demeanor in troubled times. Once stability or economic and political conditions improve, the value of investment will be lost. But the premise and foundation of economic development is the circulation and supply of commodities. There is no doubt that commodities are the lifeblood of economic, social and human civilization.

The current situation of the Chinese economy and the global economy

The global economic development has slowed down since the financial crisis, the U.S. economic outlook is worrying, and the fiscal deficit has continued to expand. Now it has reached the ceiling of $ 14,294 trillion in debt. The crisis of inability to repay national debt is imminent, and the unemployment rate is high. Monetary easing policy overprints banknotes, causing the US dollar index to continue to fall and inflation to be severe.

The European economy has been deeply affected since the outbreak of the crisis, and it is still unable to escape the haze of the crisis. The Greek debt crisis is followed by Ireland-Spain-Portugal ... Greece is currently facing the threat of debt restructuring. Relief hands dragged the economic recovery across Europe.

The second round of monetary easing implemented by the Federal Reserve in June 2011 will be $ 600 billion. Governments in various countries continue to issue currency, currency depreciation, and rising prices. This is an open fact. Keeping money in banks is tantamount to making only loss-and-no-risk investment. Real estate bubbles have serious investment risks, and the opportunities in the stock market are becoming increasingly slim.

In October 2013, the Federal Reserve announced that it would launch QE, which would hit commodity spot prices.