Research On The Risk Of Fuel Oil Market In China

In recent years, by the promoting of the international political situation and the financial capital and other factors, the international oils' prices fluctuates violently. Currently, china is in the development stage of industrialization. Oils are getting closer to social life, economic structure, industrial structure and distribution structure, which increase the domestically demand for oils. China's oils have been heavily dependent on imports and the prices fluctuate significantly with the international oil prices. In this case, many enterprises enter to the futures market, trying to avoid the risk and cut the economic cost through such financial means of the spot. The research of Hedging risk focuses on determining the hedge ratio.In china, the only oil futures– fuel oil futures which listed on the Shanghai Futures Exchange since 2004 has made a great contribution for oil companies to avoid the risk. However, because China's oil futures market appear too late and rare of species, the research on the qualitative aspects of hedge ratios are more less than quantitative aspects, which is basically in the use of foreign research models. Currently, china is urgently to prompt other energy futures species, such as gasoline, diesel futures and coal futures. In view of this, the research of the hedging risk management of energy futures market is particularly important. This paper uses a variety of methods, including traditional OLS model, BVAR model, B- GARCH model and ECM-GARCH model through which we can calculate the hedge ratio of fuel oil futures market. Finally, compare the effects and choose the appropriate calculation method for energy companies.