Baiyin Nonferrous Group Co., Ltd. (Baiyin Nonferrous), a major player in the nonferrous metal smelting and rolling processing industry, reported a net loss of 755 million yuan in 2025, marking a significant 1,034.84% year-on-year decline. This is the first time since 2011 that Baiyin Nonferrous has experienced a loss, attributed to the derivative fair value change loss.
In its “2025 Annual Report” released on April 28, Baiyin Nonferrous disclosed that its operating income reached 85.46 billion yuan, down by 1.53% compared to the previous year. The total profit amounted to 1.07 billion yuan, registering a 24.81% decrease. The net profit attributable to shareholders of the listed company was a loss of 755.27 million yuan, a decline of over 1,000%. The net profit, excluding non-recurring gains and losses, incurred a loss of 768.61 million yuan, down by 407.74%.
The core reason behind Baiyin Nonferrous’ poor performance lies in its holdings of derivative instruments and hedging tools. The annual report revealed that the company’s derivative financial liability balance stood at 1.781 billion yuan at the end of the reporting period, showing a significant increase compared to 31.9854 million yuan at the end of 2024. Additionally, the impact of “derivative instruments and hedging tools” on profit amounted to a loss of 1.422 billion yuan, indicating substantial fair value losses on the company’s short hedge positions amidst a unilateral surge in metal prices.
According to the “Daily Economic News” on April 28, in 2025, despite the rise in metal prices, the core financial data of Baiyin Nonferrous deviated significantly from the industry’s economic cycle, resulting in significant losses from the fair value changes of derivative instruments, becoming a primary factor affecting the company’s annual profits.
Overall, Baiyin Nonferrous has witnessed a third consecutive year of year-on-year revenue decline, with a 1.53% drop in revenue in 2025 compared to a 0.21% decline in 2024, further widening the gap.
Apart from the fair value changes in derivative instruments, Baiyin Nonferrous also faced challenges in 2025 as the gross profit margin of its core operations in the main businesses of copper, zinc, gold, and silver did not improve but rather decreased from 7.6% in 2024 to 7.5%.
Derivative instruments (financial derivatives) are financial contracts whose value depends on changes in the price of an underlying asset. They do not have intrinsic value but derive their value from the price of underlying assets such as stocks, bonds, commodities, interest rates, and exchange rates.
The fair value change loss of derivative instruments refers to the “unrealized losses” incurred when the fair value of derivative financial instruments (such as futures, options, forwards, swaps, etc.) held by a company decreases on the balance sheet date compared to the book value, which is recognized in the current period income statement.