Theoretical Analysis and Policy Recommendations on the Price Discovery Function of China's Hot-rolled Coil Futures

As an important risk management tool in China's steel industry chain, the efficiency of the price discovery function of hot-rolled coil futures directly affects the stability of the real economy. This article proceeds from perspectives such as the efficient market hypothesis and the cost-of-carry theory, and systematically analyzes its price discovery mechanism by combining the price linkage characteristics of China's hot-rolled coil futures and spot markets. The research finds that the hot-rolled coil futures market plays a dominant role in price discovery in the long-term equilibrium, but the short-term price guidance effect is restricted by the regional segmentation of the spot market and policy intervention. Based on this, this article proposes policy recommendations such as improving the market supervision system, optimizing contract design, and promoting the coordinated development of the futures and spot markets, providing theoretical support for enhancing the ability of the futures market to serve the real economy.