The Mechanism of Imported Iron Ore Price in China - Modern Economy

ME > Vol.9 No.11, November 2018

The Mechanism of Imported Iron Ore Price in China ()

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DOI: 10.4236/me.2018.911120 1,111 Downloads 3,459 Views Citations

Author(s)

Zhijie Fu

Affiliation(s)

University of Alberta, Edmonton, Canada.

ABSTRACT

This study analyzes the relationship and the issues between iron ore market from demand and supply side. It empirically explains how and why the import iron ore price in China fluctuates through Baltic Dry Index, Dollar Index, iron ore production, volume of import iron ore, and also compares the forecast ability between Vector Error Corrected Model (VECM) and ARIMA model. This paper concludes the following finds. Firstly, there is no structural break and seasonality. The data are first degree stationary and have 1 cointegration relationship between variables. In addition, the impulse response function shows that the import iron ore price is positively sensitive to BDI and negatively sensitive to Dollar Index, and it reveals the fact that China has less power to influence the iron ore price even if it has been the largest buyer. Finally, forecast ability assessment shows that VECM outperforms ARIMA model.

KEYWORDS

Iron Ore Price, ARIMA, Cointegration, IRF, VECM

Share and Cite:

Fu, Z. (2018) The Mechanism of Imported Iron Ore Price in China. Modern Economy, 9, 1908-1931. doi: 10.4236/me.2018.911120.

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