Research On The Application Of Futures Hedging In N Company

The supply and demand of iron and steel industry is faced with many uncertainties,which are affected not only by the domestic supply-demand relationship,but also by the fluctuation of commodity prices in the international market.Since 2020,due to the impact of the new crown epidemic,and OPEC's production reduction agreement is less than expected,the international crude oil price has dropped sharply,driving the prices of other commodities down all the way.In such a complex environment,how to avoid risks,sound operation is particularly important.Reasonable use of futures as a derivative financial instrument for hedging is an important measure for the stable operation of enterprises.This paper introduces the concept and principle of hedging,as well as the overall situation of domestic hedging market,the risks faced by the industry under the current international situation and the necessity of using futures hedging tools for hedging in iron and steel industry.Then,taking the application of futures hedging tools in the actual production and operation of N company as the research object,this paper introduces the process of N company's participation in hedging,analyzes the effect of purchasing hedging strategy of raw materials,the effect of hedging strategy of selling finished products,and the strategic hedging effect of production and sales plan.This paper analyzes the effect of using futures hedging in N company,demonstrates the great role of futures hedging tools in purchasing management,inventory management and sales management in the production and operation activities of enterprises,and proves that the use of futures hedging tools in the production and operation of enterprises can effectively avoid the price fluctuation risk of bulk commodity raw materials procurement Effective management of enterprise inventory can also effectively lock in the profits of the enterprise,which has practical reference significance for enterprises in the iron and steel industry to achieve stable operation.But in the actual operation,it also revealed that the management's confidence was not firm enough.They were worried that the unilateral loss of futures would cause misunderstanding of shareholders and investors,and that hedging operation could not create profits for enterprises.In view of these problems reflected by enterprises,this paper also puts forward optimization suggestions,suggesting that enterprises should enhance the ability of information analysis,strengthen the use and information disclosure of hedge accounting,and improve the efficiency of enterprises through virtual production lines.The innovation of this paper is based on the actual production and operation needs of enterprises,based on the grass-roots level,based on the first-hand information and data,the case is analyzed in depth,which has a higher reference significance for other enterprises.The disadvantage of this paper is that it only analyzes the futures hedging strategy,but does not introduce the derivative financial instruments such as options and swaps which are also of high practical value.Limited to the development stage of the case enterprise,the optimization of the hedging application of the case enterprise is still only theoretical research and assumption,but not practical application.