Shengdun Mining Plans to Launch Commodity Derivatives Trading in 2026, with Margin Cap Not Exceeding 30% of Previous Year's Net Assets

On March 20, Shengtun Mining (Rights Protection) Group Co., Ltd. (Stock Code: 600711, Stock Abbreviation: Shengtun Mining) announced that the company’s 26th meeting of the 11th Board of Directors held on March 18, 2026, approved the proposal on conducting commodity derivatives trading in 2026. To hedge against risks from fluctuations in bulk commodity prices and improve profitability, the company and its controlling subsidiaries plan to engage in commodity derivatives business in 2026. The margin at any point in time for open contracts will not exceed 30% of the audited net assets of the previous year (excluding margins occupied by standard warehouse receipt deliveries). This limit is valid from the date the company’s 2025 annual shareholders’ meeting approves it until the date of the 2026 annual shareholders’ meeting. The proposal still needs to be submitted for approval at the company’s shareholders’ meeting.

Business Overview: Focus on Non-Ferrous Metals and Precious Metals

The announcement shows that the commodity derivatives business launched by Shengtun Mining is closely related to the company’s assets and trade operations, aiming to hedge against price fluctuations of bulk commodities through futures, options, swaps, and their combinations. The traded varieties mainly include non-ferrous metals and precious metals related to the company’s industrial layout. Trading venues include domestic markets such as the Shanghai Futures Exchange, Dalian Commodity Exchange, Zhengzhou Commodity Exchange, Shanghai Gold Exchange, Guangzhou Futures Exchange, as well as international markets like the London Metal Exchange, COMEX, London Bullion Market Association, Hong Kong Exchanges, and Singapore Exchange, among others, in countries or regions with bilateral regulatory cooperation memoranda signed with the China Securities Regulatory Commission.

Regarding funding sources, the principal can be from self-funded margins or guarantees, collateralized leveraged trading, or unsecured, uncollateralized credit lines. Settlement methods include physical delivery and cash price difference settlement.

Necessity and Risk Control: Responding to Price Fluctuations and Strengthening Compliance Management

Shengtun Mining states that prices of bulk commodities are influenced by multiple factors such as market supply and demand, geopolitical issues, industry cycles, interest rates, and exchange rates, leading to frequent volatility. Through years of research on the bulk commodity markets, the company utilizes commodity derivatives tools to hedge against price risks, extending the benefits of production and trade operations, which is conducive to sustainable development.

To control risks, the company has established multiple operational standards: transactions are primarily for hedging, conducted only with financial institutions qualified for derivatives business, with independent trading accounts, using self-owned funds without affecting normal operations, and adhering to the principle of separating risk control from specific operations. Additionally, the company will mitigate market, liquidity, technical, internal control, policy, and legal risks by selecting reputable trading venues, establishing dedicated decision-making mechanisms, implementing strict stop-loss and take-profit measures, and strengthening compliance supervision and inspection.

Accounting Treatment: Following Relevant Standards for Proper Recognition

The company will account for and disclose commodity derivatives in accordance with relevant regulations such as “Enterprise Accounting Standard No. 22—Financial Instruments Recognition and Measurement” and “Enterprise Accounting Standard No. 37—Financial Instruments Presentation.” Since the traded varieties are actively traded on domestic and international markets with high transparency, liquidity, and low credit risk, the transaction prices and settlement prices can fully reflect the fair value of derivatives.

Core Elements of Shengtun Mining’s 2026 Commodity Derivatives Trading Business

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