Company A Uses Futures Market To Conduct Research On Risk Management

Petrochemical industry is a pillar industry in China.The sharp fluctuation of product prices in its industrial chain not only affects the profits of relevant enterprises,but also affects the national economy and people's livelihood.At present,enterprises in the petrochemical industry chain reduce production costs and avoid risks by expanding production scale and covering the whole industrial chain.But with the deepening of economic globalization,the petrochemical industry chain products price fluctuation has become the norm,combined with the domestic petrochemical industry capacity growth too fast,the pattern of supply has lasted for many years,the petrochemical industry chain enterprises operating profits continue to compression,and maintain a perennial unstable state.This creates huge risks for companies in petrochemical industry chain.With the healthy development of China's futures market,it is very important for entity enterprises to actively participate in the futures market to avoid the risk of market price fluctuation.How to use the futures market to avoid the spot market price risk,awareness of the risks of use futures tools,and eventually to effectively manage these risks for companies is a key problem.Some companies refuse to participate in the futures market for fear of risk and thus make the spot is exposed to the risk.Though there are some enterprises to participate in the futures market,but the understanding of the futures market is one-sided.These are the lack of understanding and management of risk in the futures market.Company A is the domestic large-scale chemical enterprise,actively participate in the futures market and correct understanding to the futures market risk,and the risk management applied to the daily work of the enterprise,make full use of the futures tools to reduce the production cost,avoid the inventory risk,lock operating profit,etc.Under the background of supply-side structural reform of petrochemical industry,entities based on the domestic petrochemical industry chain enterprises as the main research object.And expounds the cases involved in futures market risk management of company A,analysis of the company background,discussed the spot market and futures market risk of company A,and analyzes the company A on the spot market and futures market risk management with its effect,finally it is concluded that the inspirations for risk management of company A.Now research literature in petrochemical industry Angle is less,and petrochemical related futures hedging research focused on how to operation,how to determine the optimal hedge ratio,but few studies have been conducted on the risk avoidance of petrochemical enterprises by using futures tools and the risk comes from itself.This article through to the petrochemical enterprises use futures tools to spot market and futures market's risk and gain enlightenment,therefore the innovation point of this essay is research angle.This paper is based on the case study of company A,which may not represent all enterprises in the petrochemical industrial chain,making this paper less universal.