Research On Steel Futures Hedging By A Construction Company

A construction enterprise keeps undertaking all kinds of engineering businesses, in 2009 it has undertook 150 projects and used 900 thousand tons of deformed steel bar. Because the contract (contract presale and producing) of each project was signed at a time point while the completion and operation of the project (production and marketing) is from several months to several years, the largest risk for whether the project's reasonable profit can be created in accordance with the expectation or not is the unfavorable fluctuations of building material prices, especially the price of deformed steel bar. The steel industry is of large scale, long industrial chain and many price influential factors. Taking advantage of the remarketing of steel futures in 2009, this thesis take how A construction enterprise hedging to lock steels purchase cost and control risk as object, to propose rationalization proposal, the study is of practical significance.This thesis is divided into five chapters:Chapter 1. Introduction; introduces the background and meaning of this topic, relative domestic and overseas literature review, as well as the research thought and technical route; Chapter 2. Steels price change factors and futures theory. Analyzing the trading price mechanism of steels and the influence of price changes, dissecting the rationale of futures hedging and factors which influence the effect of futures hedging; Chapter 3. Problems and strategies that A construction enterprise uses for futures hedging. Combining the characteristics of A construction enterprise's steels operation to recognize its risk features, combining the futures hedging principles to design strategies for construction enterprises'futures hedging; Chapter 4. Analysis and suggestion for using steels futures to operate A construction enterprise's case, according to the practical case analysis to operate and analyze the optimizing strategies for hedging and also put forward relative suggestions; Chapter 5. Conclusions and outlook.The investigative emphasis of this thesis is:firstly, take the low side of steels industry chain-A construction enterprise who has to avoid price change risk as starting point to find the causes of steels price change; Secondly, combining the characteristics of futures and spot goods, take advantage of the results of the hedging strategies and operation of optimizing hedging by the case study get from the analysis to A construction enterprise to propose suggestions for A construction enterprise to take out first-phase preparations for hedging strategies:try to make the exchange's futures price as the basis of pricing spot transaction and then to locate the module of steels'spot transaction, to let A construction enterprise utilize steels hedging operation to make fast reaction by moving round the market change practically, as well as suggestions for setting up risk management system and policies.