Research On The Application Of Iron Ore Hedging In Chinese Iron And Steel Enterprises

In recent years,with the rapid rise of China's iron and steel industry,China's iron ore imports have gradually increased,and in 2003 passed Japan to become the world's largest iron ore importer.Under the exponential pricing model,the fluctuation of iron ore price becomes more and more frequent,which makes Chinese iron and steel enterprises face greater risk of price fluctuation,which promotes the listing of domestic iron ore futures.On May 4,2018,the iron ore futures trade(foreign traders)officially launched,marked the global iron ore futures trade in yuan officially starts,to foreign mining companies such as through the path,to improve the influence of the futures price of iron ore,and the formation of a more open,fair and just in iron ore prices.Looking into the future,the perfection of China's iron ore futures trading rules,the continuous expansion of the scale and the centralized participation of trading funds will certainly promote the formation of China's iron ore market pricing process,and make China's pricing power in the international iron ore market to be expanded.At present,China's iron and steel enterprises are facing such problems as inadequate bargaining power of raw materials,high external dependence of raw materials and small profit margin,which urgently require iron and steel enterprises to pay attention to the control of production costs.Iron ore,as one of the important raw materials for iron and steel enterprises,plays an important role in the production process of iron and steel enterprises.However,due to the frequent price fluctuations of iron ore itself and the large range of changes,iron and steel enterprises bear tremendous risk of cost changes.This makes the production of iron ore futures in China not only become the source of authoritative price information for domestic iron and steel enterprises,but also become a useful tool for risk management.In addition,under the background of the current state's vigorous implementation of capacity-free policy,the competition among iron and steel enterprises is becoming increasingly fierce.How to hedge with futures instruments to avoid risks,reduce costs and increase efficiency,so as to improve their competitiveness,is of vital importance to the development of enterprises.The paper introduces the related theory of hedging,the necessity of hedging for iron and steel enterprises to participate in the iron ore are expounded,and then use historical data to establish econometric model for iron ore futures of optimal hedge ratio and hedge performance has carried on the empirical research,combined with market analysis and enterprise actual demand is given to illustrate the application of the iron ore hedging case,systematically discusses the application of iron ore iron and steel enterprise futures hedging method,and put forward the possible problems in the enterprises in the iron ore hedge,improve the efficiency of hedging related Suggestions are given accordingly.