Steel futures were listed in the previous issue on March 27th. After listing, the price runs in line with market expectations, and the transaction is very active, showing the enthusiasm of investors from all sides. However, in the process of our contact with customers, many investors talked about the risks in the futures market, especially steel trading enterprises. Because the sharp drop in the steel market after the Spring Festival has caused losses, they are afraid of the risks in the futures market, and many enterprises hold a wait-and-see attitude towards participating in steel futures. Undeniably, the risk of steel futures market will not be smaller than that of spot market, and its risk mainly comes from two basic characteristics of futures: first, anticipation, which is essentially an expectation of the future, with correct expectations and losses. Correct expectations come from in-depth research and comprehensive analysis of the market. Many entrepreneurs focus on specific businesses and have no time to study the market. It is not easy to accurately judge the market, futures and spot are the same. The second is leverage. All futures transactions are "small and broad", and most of them do not need physical delivery, which makes huge profits and huge losses. Futures trading can amplify gains and losses. Some enterprises think that the risk of steel futures is huge, but they ignore that the design of steel futures is actually to avoid the risk of steel market and transfer the risk to those investors or speculators who are willing to take risks. After years of bull market operation, the domestic steel market continues to be hot, and the price rises and falls less, making steel production and steel trade less risky investments, and also making some people slightly careless about how to avoid market risks.

However, the market crash after July 2008 not only caused heavy losses to steel enterprises, but also declared the end of the steel bull market. Steel mills and traders are natural bulls in the spot market, and only when the market price rises can they make a profit. However, since 2009, the steel price trend is completely different from before, which also makes some enterprises really feel that the steel market may turn into a bull short bear long. Only by actively using futures tools in spot operations can we avoid market price risks, ensure the stability of production and operation, and maintain the sustainable development of enterprises. Steel mills and traders should adhere to the principle of hedging when participating in the futures market. Participating in futures trading through hedging not only avoids the risks in the spot market, but also eliminates the risks in the futures market. What enterprises need to do is to find a futures company that can cooperate for a long time and design a perfect hedging scheme according to the actual production and operation.