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Chinese steel market in the post-futures period

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  • Arık, Evren
  • Mutlu, Elif

Abstract

We expand the research on commodity futures markets into a newly developed market: steel futures. We examine the most liquid steel futures market in the world, the Shanghai Futures Exchange, which counts for nearly all of the global trading activity. Our findings suggest that following the launch of the steel futures, steel has become a more “financial” product. We first explore the relationship between the spot and futures prices. Futures market finds its place in the price discovery process where the spot market continues to maintain its prominence. We also find evidence indicating that volatility in the spot market has decreased during the post-futures period. Our findings suggest that regulators should consider launching the steel futures so as to enhance the completeness of the market while also taking great care to preserve the link between the physical and the financial market.

Suggested Citation

  • Arık, Evren & Mutlu, Elif, 2014. "Chinese steel market in the post-futures period," Resources Policy, Elsevier, vol. 42(C), pages 10-17.
  • Handle: RePEc:eee:jrpoli:v:42:y:2014:i:c:p:10-17
    DOI: 10.1016/j.resourpol.2014.08.002
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    References listed on IDEAS

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    Cited by:

    1. Wang, Qi & Zhang, Chunyu & Ding, Yi & Xydis, George & Wang, Jianhui & Østergaard, Jacob, 2015. "Review of real-time electricity markets for integrating Distributed Energy Resources and Demand Response," Applied Energy, Elsevier, vol. 138(C), pages 695-706.

    More about this item

    Keywords

    Steel futures; China; Commodity markets; Non-precious metal markets; Price discovery;

    JEL classification:

    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics

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