Bull Group Crosses into Paper Industry

On December 27th, Bull Group announced a feasibility analysis report on conducting bulk raw material futures business.

1、 Transaction purpose

In order to effectively avoid and reduce the risk of raw material price fluctuations related to the company's production and operation, the company plans to carry out bulk raw material futures business at an appropriate time according to the production and operation plan, ensuring the relative stability of product costs and reducing the impact of price fluctuations on production and operation.

2、 Overview of transaction situation

（1） Transaction amount

The company's deposit shall not exceed RMB 800 million, and the above-mentioned amount is within the authorized scope and can be reused.

（2） Source of Funds

The company's funds for engaging in bulk raw material futures business come from its own funds and do not involve fundraising.

（3） Transaction method

The company plans to carry out futures contracts related to the production and operation of copper, silver, aluminum, tin, plastic pellets, pulp, and other commodities through domestic commodity futures exchanges.

3、 Feasibility analysis of conducting bulk raw material futures business

With the development of the domestic futures market, the spot prices of bulk materials, especially copper, silver, aluminum, tin, plastic particles, pulp, and other commodities, are closely related to futures prices. Smelters, traders, consumers, and others use the daily price trends of various exchanges as the basis for pricing. Based on price discovery, enterprises have become necessary means of stable operation by locking in operating profits and avoiding risks through futures market trading.

Due to the high demand for bulk materials such as copper, silver, aluminum, tin, plastic particles, and pulp, the price fluctuations of these materials directly affect the company's business performance. Therefore, it is necessary to assist normal production and operation activities through futures trading of bulk raw materials. The company determines the scale of futures business based on the demand for bulk materials in production and operation, strictly controls the quantity and funds of futures trading, and ensures that it does not affect the normal production and operation of the company. At the same time, the company establishes a hedging operation management system to strengthen the risk control of futures business.

4、 Viewpoint

Firstly, reflecting the instability of the market, in order to achieve long-term development, enterprises must personally control the supply side and ensure sustainable development.

Secondly, it is beneficial for the stability of pulp prices, as more enterprises join the pulp futures market and multiple funds form a polygonal force to ensure the stability of pulp prices in the domestic market.

Once again, the addition of Bull Group will not have an impact on the operating trend of the paper industry for the time being, as the amount of funds is small and cannot influence prices.