Research On Energy & Chemical Enterprises Use The Futures Market

In the last decade,the world economic circumstance faced recession due to many unstable factors.Those emerging markets also faced challenges on continuing keep the unprecedented pace on development.Among all industries,the Energy&Chemical industry is especially threated by those unstable factors due to its tedious and complicated industrial chain.The fluctuated market prices have significant negative impact on the prudent operation of entity enterprises.Therefore in order to solve the contradiction between supply and demand in the operation and management,entity enterprises usederivatives correctly to help themselves avoid risk of price volatility,promote the market pricing mechanism,eliminate backward production capacity,and adjust the industrial structure.Futures market is the guardian of transitional substantial enterprises.Based on the background of the development of realenterprise under Supply-side Reform,companies of Energy&Chemical industry as the main research objects,we summarizethe case of Qingdao Jiaderui Enterprise's using of hedgingin the futures market.This paper analyzehow this company makes full use of financial derivative in the futures market to operateits risk management.It helps the company to optimize inventory management,improve cash management flexibility and capital utilization and enhance their bargaining power.However,from the point ofEnergy&Chemical industry,many domestic enterprises still face the restriction of market system,policy environment and the lack of professional talents.Especially the private enterprises are not willing to or even dare to use futures derivative tools.Based on the case analysis,this paper puts forward some suggestions from the standpoint of entity enterprises andmarket:real enterprises need to define their market positioning,review risk preference,build standard-operation inner control system;the government needs to strengthen the supervision and support the relevant policies;Futures Exchange needs to improve the futures exchange trading system and providesa broader market platform;futures intermediate institutions need to optimize service capabilities.