Research On The Use Of Futures Markets To Promote The Development Of The Iron And Steel Industry

China's steel industry, now in terms of production capacity or consumption, are living in a leading position in the world after decades of development. However, the spot market alone cannot solve some of the problems arising in the development process. This paper analyzes the draw, lack of authority of prices caused by low industrial concentration, low industry profitability, the lack of large-scale traders and other issues, have called for the appearance and improvement of the futures market. Since the March 2009 launch of two futures (rebar and wire rod) in China, Steel futures played a role on the iron and steel industry. This article uses econometric methods to test the steel futures' development situation, the degree of their economic functioning.Rebar futures market(Due to smaller wire futures, so the rebar as an example) developments in the econometric analysis:Obtained through the measurement test, China's steel futures market and spot market were developing in basic balance, But this equilibrium relationship was not very stable. Market established a short time, information asymmetry, excessive trading and financial crises were all possible factors.Empirical Study of the economic function of rebar futures:Obtained through the measurement test, Rebar futures market's price discovery and hedging functions had basically been playing, but needs to be further enhanced.According to the current development of steel futures markets, This paper presents recommendations that Continuing to improve the hedging operations and the development of electronic market of steel. And considering the low rebar futures hedging performance, Basis trading is proposed to strengthen for some enterprises.Now China's steel futures market has been initially established, the preservation of steel products has played an important role. However, volatility in the cost of the upstream iron ore has been one of the most serious threats for the development of steel Industry. Due to limited data availability, this paper introduced the feasibility and necessity of iron ore futures'launching through qualitative methods. Also this paper suggests that speeding up the reform of RMB exchange rate mechanism in order to boost iron ore futures is needed. Through the establishment and improvement of the downstream steel futures market and upstream iron ore futures market, China's steel industry will be able to develop faster and better.