Practice Analysis Of Hedging In China's Iron And Steel Industry

Although the scale of iron and steel production in China is large,and the output of iron ore and steel is in the leading position in the world,it fails to grasp the pricing power and many iron and steel enterprises have paid a heavy price for this.In addition,in recent years the iron and steel industry appeared overcapacity,leading to increasingly prominent contradiction between supply and demand.Futures as a tool of price discovery and risk management,in the past 20 years,copper,aluminum,oil and other enterprises in China have entered the futures market,controlledenterprise profit risk caused by the price fluctuation throughhedging tools and methods.At that time,by contrast,China's steel enterprises were rarely able to achieve this response to the risk effect.Wire futures,rebar futures were officially published in Shanghai Futures Exchange in March 2009,and then coking coal,hot rolled steel plate,nickel,iron ore,coke and other futures products began to be displayed in domestic futures exchanges.Therefore,the black industrial chain structure with coal,iron ore,iron and steel,coking coal as the main elements appeared in the market.From then on,steel enterprises participated in the hedging market with a new attitude.In this situation,for this article,in order to reduce the operational risk of enterprises,taking the iron and steel enterprises as the research object,it is of far-reaching significance to explore the futures hedging in depth.This paper adopts a variety of methods,such as demonstration combined with cases,theory combined with practice,quantity combined with quality,etc.At the same time,the author hasthe aid of futures and spot data of iron and steel industry and combines with the development of iron and steel industry.Firstly,the paper discusses the definition of futures and hedging,the application principle of hedging,the present situation of steel enterprises'participation in futures market,which provides theoretical support for the research of this subject.In addition,from the perspective of future construction of steel enterprises in our country,combining with hedging theory,this paper elaborates the feasibility,necessity and importance of carrying out futures hedging system in iron and steel industry by means of empirical analysis,the function and influence of hedging accounting.Finally,the necessity and important role of hedging in NGGF Company are analyzed in the hope of providing some reference for Chinese steel enterprises to establish and implement hedging system.The main contributionsare as follows:first,the paper studies the performance of rebar futures and iron ore futures in the market and their relevance to spot prices,and demonstrates the feasibility of hedging in Chinese steel enterprises.Second,in order to formulate a more perfect hedging scheme,the author makes a deep analysis from the two aspects of passive hedging and active hedging,and points out that steel enterprises should take the development current situation,operation mode and risk pre-control and hedging operation level into comprehensive consideration before choosing appropriate hedging strategies.