Zhongyuan Chemical Plans to Conduct PVC and Soda Ash Futures Hedging with Margin Cap of 200 Million Yuan

【Financial News】China National Salt Industry Inner Mongolia Chemical Co., Ltd. (Stock Code: 600328, Stock Abbreviation: China Salt Chemical) announced on March 18th that to hedge against the risk of major product price fluctuations, the company will conduct futures hedging for products such as polyvinyl chloride (PVC) and soda ash. The estimated maximum margin used will not exceed 200 million yuan, and the maximum contract value on any trading day will not exceed 1.617 billion yuan.

The announcement shows that the hedging period is 12 months from the date of approval by the board of directors. The funds will come from the company’s own resources and do not involve fundraising or borrowing. The transactions will be carried out through domestic commodity futures exchanges, mainly involving futures contracts directly related to the company’s production and operation, such as PVC and soda ash.

Business Background and Purpose

In recent years, influenced by global capacity adjustments, energy price fluctuations, tightening environmental policies, and structural changes in downstream demand, the market prices of products like PVC and soda ash have become more volatile. China Salt Chemical stated that the purpose of this hedging activity is to effectively avoid the impact of price fluctuations on operating performance, lock in production and operating profits, and ensure supply chain and cash flow stability.

Transaction Scale and Fund Arrangements

Risk Control Measures

The company emphasizes that this business strictly adheres to the principle of hedging and is not for speculative purposes, but it still faces multiple risks such as market risk, basis risk, and funding risk. To address these, the company has established a series of risk control measures:

• Market Risk Control: Dynamically track spot and futures price trends, adjust hedging ratios in real-time
• Funding Risk Control: Reserve no less than 30% of the total margin as backup funds, strictly prohibit the use of raised funds and credit funds
• Liquidity Risk Control: Prioritize trading main contracts of Dalian Commodity Exchange PVC and Zhengzhou Commodity Exchange soda ash, as well as contracts with the top 3 trading volumes
• Operational Risk Control: Establish a “decision-operation-risk control” three-tier separation mechanism, with all transactions documented
• Compliance Risk Control: Strictly comply with relevant laws and regulations, ensuring the hedging scale does not exceed the authorization limit of the board of directors

Approval Procedures and Accounting Treatment

This matter was approved by the company’s Audit Committee of the Board of Directors on March 16, 2026, and was approved at the 11th meeting of the 9th Board of Directors on March 17th, without the need for shareholder approval. According to the announcement, this hedging activity meets the conditions of the “Enterprise Accounting Standard No. 24—Hedge Accounting,” and the company plans to adopt hedge accounting for recognition and measurement.

China Salt Chemical stated that conducting hedging activities is a necessary measure to respond to market price fluctuations and strengthen risk management. It will not change the company’s main business or operating model, and is conducive to stabilizing operating profits and optimizing inventory management, aligning with the company’s long-term development interests.

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