Research Of The Hedging Programme For Rebar Processing Enterprises

With rapid progress in industrialization, steel has become one of the most growing industry in the world. To be in a large scale, steel is the most important engineering building materials in the world. To be in a small scale, steel is around us everywhere. For example,vehicle, building products, medical equipment household appliances and so on are all made of steel. Thus for us how important the steel is in life. More than that, steel is also the symbolization of the economy of a nation. China is the major steel-producing and processing country in the world. Both the production of steel and the products of steel is developing rapidly. However, because of a range of factors like the excess capacity of steel industry, the decline of the demand downstream, the exports stumble of steel and the sharp rise of the market inventory, the price of steel declined significantly. Steel companies are facing severe operational risks. Thus the using of hedging by iron and steel enterprises is particularly significant. As a safe-haven hedging is widely used in iron and steel enterprises.This paper simply introduces the fundamental condition and development general situation of both domestic and foreign futures market. And it also focuses on the correlative conceptions and theories of futures market and hedging. Then by using Eviews, the author analyzes the relationship between the spot price and the futures price of rebar and the optimal hedge ratio. It includes the price movements of the spot and futures prices,stationarity test, co-integration test, Granger causality test and error correction model.Besides that, this article also conducts a simple research on hedging performance. At last according to the fundamental state of Shougang Alliance of Xingang Co.,Ltd, from the falling and rising prices two aspects, this article studies the rebar and iron ‘s hedging programme.