Feasibility Study of Creating Acetic Acid Futures Contract in Iran

The risk of price fluctuations of oil and gas products has always caused many problems for the activists of this industry. Iran is one of the largest owners of hydrocarbon resources and producer and exporter of acetic acid. The purpose of this research is the feasibility of creating an acetic acid futures market as a tool to cover the risk of the industry's operators. For this purpose, the Pennings and Meulenberg three-part method was used, which states that for the feasibility of creating a futures market for any commodity, the feasibility needs to be carried out in three steps: examining the characteristics of the desired commodity, examining the characteristics of the market and the contract, and examining the possibility of Cross-Hedge for commodity price risk. The results of the investigations indicate that it is not possible to create a market for acetic acid futures contracts in Iran, because despite the price fluctuations, the production of this product is a Duopoly in the hands of Fanavaran Petro Olefin and Arak Petrochemicals and this violates the third law of the Pennings and Meulenberg method which is the requirement of non-monopoly market.

Keywords:

Futures market , Acetic Acid Market , Commodity Exchange , Oil Derivatives , Risk Hedging