The Impact Of Exchange Rate Fluctuation On The Import And Export Trade Of Iron And Steel Enterprises And The Countermeasures Analysis

In recent years,the fluctuation of steel market is closely connected with national political policies and economic policies.As one of the important bulk commodities,the price of steel concerns the national economic strategy on a higher level,and concerns the people’s living standard on a light level.At present,for further development,China’s steel industry needs face serious problems such as excessive steel production capacity,great price fluctuation of low-end steel,intensified uncertainty of the enterprise profit and loss,lack of bargaining power of the steel enterprise demands and the products supplied in the international,etc.If the steel enterprise wants to moves toward internationalization,the impact of RMB exchange rate fluctuations on the costs and profits of the enterprise is the first problem to be faced.Therefore,the steel enterprise urgently needs to establish risk prevention measures to deal with the operational risks that RMB exchange rate fluctuation may bring.As an important factor affecting the cost and profit fluctuation of steel enterprise,it is necessary to conduct special research on the fluctuation of RMB exchange rate.This paper first introduces the background of the topic and the practical significance of the paper,comprehensive review,content general situation and the methods applied of the study done by domestic and foreign experts and scholars on the fluctuation of RMB exchange rate and analysis of the framework;Secondly,from the theoretical situation of RMB exchange rate fluctuation,the exchange rate trend chart in the past 20 years,Marshall-Lerner condition,J-curve effects and other theories,this thesis analyzes the influence of exchange rate fluctuations in recent years on the current overall situation of import and export of China’s steel enterprises;Thirdly,it selects two major enterprises in different places and with the similar scales-take Jingye Iron and Steel and X Iron and Steel as an example,through further detailed analysis and comparison between the actual import and export data of Jingye Iron and Steel and X Steel in nearly 8 years,it gets the conclusion that the impact of RMB exchange rate fluctuation on the amount of imports of Jingye Steel and X Steel is respectively 62.74% and 51.35%;the impact of RMB exchange rate fluctuation on the amount of exports is respectively 70.34% and 52.69%;the impact of RMB exchange rate fluctuation on the gap between imports and exports is 68.37% and 56.22%.It states that the impact of RMB exchange rate fluctuation on import and export business of Jingye Iron and Steel is significantly greater than that on X Steel.In short,recent international political and economic environment has changed dramatically.Especially the event that the United States announced the trade war against China since March 1,2018 and officially began to impose tariffs on US$34 billion of Chinese goods at 12 noon on July 6,2018 including an important event that impose 25% tariff on steel and President Trump announced on September 18,2018 to impose tariffs on US$200 billion of Chinese goods and other major political and economic events,have had a certain impact on China’s steel enterprises.The trade war has not only had a huge impact on Sino-US trade,but is also a comprehensive contest between great nations.The trade war reflects China’s dependence on "US dollar system",and the dependence causes the increase of fluctuation range of RMB exchange rate and exchange rate risk.In today’s world,political structure and economic pattern have undergone dramatic changes.Different enterprises have adopted different coping strategies,and the results produced are greatly different.Through comparative analysis,it is concluded that X Steel is more focused on international and capitalized strategic deployment than Jingye Iron and Steel no matter on corporate culture,corporate business objectives,overseas market positioning,corporate high-level management’s awareness of financial market,the way to maintain overseas customers,corporate financial practitioners,the operation level of trade financing business,etc.Due to above differences in operations,X Steel has a more flexible and diversified approaches to deal with foreign exchange risk in the process of import and export business.Therefore,the impact of RMB exchange rate fluctuation on X Steel is far less than that on Jingye Steel.