Research On The Relationship Between Polypropylene Futures Price And Spot Price

The perfect futures market system plays an important role in the economic development of developed countries such as Europe and the United States.With the mature trading of agricultural products,energy futures and financial futures,the United States has become a global economic center,and the United Kingdom occupies an important position in the world financial center with the metal futures market.With China’s economic development entering into the shift period,the real economy is facing new challenges.The mature futures market plays an increasingly prominent role in the economic transformation.At the same time,China has become the world’s largest commodity trading country.However,there is a lack of pricing power in commodities,Therefore,it is very important to study the price discovery function of futures market.This paper studies the relationship between future price and spot price of polypropylene,the reason for choosing this product is that polypropylene is widely used,with a market scale of 200 billion RMB.After five years of listing and trading in DCE,it has certain metal properties and has certain representativeness.Hope to provide reference for other futures products.The research attempts to solve the following problems:1)After more than five years of development,whether there is a relationship between the futures and spot prices of polypropylene.2)If there is a certain relationship between them,is it a long-term equilibrium relationship.3)Whether there is a mutual guiding relationship between them.4)Whether the price discovery function of PP’s futures market is effectively played.The first chapter is the introduction,it introduces the background and significance of the topic,focuses on the analysis of domestic and foreign related research status,presents research ideas and methods.The second chapter is the related theoretical basis,including the introduction of polypropylene,the basic theory of futures market,the theory of the relationship between futures and spot market price,the formation principle of the price discovery function in the futures market.The third chapter focuses on the analysis of the current situation of the development of polypropylene futures market and spot market and makes a thorough and detailed analysis of the relevant factors affecting the price of polypropylene futures and spot market.Chapter 4,uses the empirical analysis method by selecting the polypropylene futures price and the corresponding spot price data of DCE from 2014 to 2019 to form the time series research object.With the use of Eviews software conduct quantitative analysis on the samples,including stability test,co-integration test,unit root test,VECM and Granger test to verify the relationship between future price and spot price of polypropylene.The fifth chapter,combines the results of empirical research with practice,puts forward measures and suggestions to promote the healthy development of polypropylene futures and spot market and allows a forward-looking planning.The conclusion is as follows:1)There is a long-term equilibrium relationship between polypropylene futures and spot prices.When the short-term price deviates from the equilibrium state,the price of polypropylene spot market and futures market will adjust towards the equilibrium price,and finally return to the equilibrium state,which also provides the precondition for polypropylene futures market to avoid risk hedging.2)Polypropylene futures and spot prices have a mutual guiding relationship.The change of spot price will be reflected in the futures price,and the futures price can also affect the spot price.Polypropylene futures market has a better price discovery function.Finally,combining the empirical results with the actual situation of polypropylene futures market,we know that:The polypropylene industry has a solid foundation and active spot trading.Since the official listing of DCE,the market has gradually improved.The futures contract design and trading system are more reasonable,and the volume of transactions and positions have continued to grow,ranking among the forefront of domestic similar varieties,with the continuous participation of industry chain participants,the interaction between futures and spot prices is closer,the price system is more mature,the influence of futures pricing is expanded,the hedging efficiency is higher,the function is better,the market information and real supply-demand relationship are fully reflected,the empirical results are consistent with the actual market performance results,indicating that through the development of five years,the price of polypropylene futures market is found With the function of risk aversion,futures have been mature and meet the original intention of developing polypropylene futures market.According to the research conclusion of this paper,the relevant suggestions are given from the perspective of market participants and regulators respectively:1)For the participants of polypropylene market,based on the effective play of price discovery and risk aversion function of polypropylene futures market,it is suggested to further improve the participation of polypropylene futures market,and actively combine multiple futures tools such as basis trading and over-the-counter options to stabilize the development of enterprises and obtain reasonable profits.2)For the regulators,it is suggested to further improve the regulatory policy,and on the basis of the maturity of polypropylene futures market,timely launch polypropylene futures options,accelerate the internationalization of polypropylene futures,and enhance the voice of polypropylene in the international market.The innovation of this paper is that polypropylene,as a futures product,has been listed relatively late in China’s futures market,and the existing materials have less research on the relationship between the prices of this product.This paper collects the latest data of polypropylene futures since it was listed,carries out sample quantitative analysis,and provides a corresponding supplement for the existing theoretical system,which has a strong timeliness and representativeness.It has more reference significance for the actual operation of polypropylene futures market.