The Application Of Hedging Theory For PTA Futures

The last three decades, the world economy is booming. It improved people’s quality of life and led the development of the textile, light industry, electronics, and other industries. As a main raw material of the textile, polyester development is very rapid, while driving expansion of PTA capacity. Especially after2011, PTA industry usher in a new round of investment peak and it has well-known manufacturer of PTA. China has become the world’s largest PTA production and consumption country.Purified terephthalic acid (PTA) is the main bulk of petrochemical raw materials. Various factors impact on the PTA, such as global macroeconomic, crude oil prices, PTA supply and demand, seasonal demand and overhaul of the device. Price volatility brings difficulties and challenges to enterprise. In2012under the double attack of high cost of upstream and weak downstream demand, PTA corporate profits reduce a lot.Futures market is an important risk management places. It can circumvent the risk of fluctuations in the spot price. Producers and traders engaged in hedging business through the futures market. It avoids price risk and stable product prices, at the same time it can reduce operating costs and maximize corporate profits. It also plays a role to stabilize the total social costs.By basis analysis, PTA futures have a price discovery function and achieve hedge. Combined with tactual situation of A Company, it compares the profit difference before and after hedging. At the same time it uses the optimal hedge ratio and the minimum variance hedging strategy. It proves the PTA futures to eliminate the risk of fluctuations in the spot price. Basically it reaches the optimal hedging effect.