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The Relationship between Bulk Commodity and Chinese Steel Prices

Author

Listed:
  • Mark Caputo

    (Reserve Bank of Australia)

  • Tim Robinson

    (Reserve Bank of Australia)

  • Hao Wang

    (Reserve Bank of Australia)

Abstract

Iron ore and coking coal are complementary inputs for steelmaking and therefore their prices are closely related to steel prices. Historically, trade in iron ore and coking coal was based on long-term contracts, but in recent years there has been a shift towards shorter-term pricing, including on the spot market, and consequently prices reflect market developments more quickly. This article analyses the relationship between the spot prices for iron ore, coking coal and Chinese steel products, and finds that in the short run the spot price for iron ore has tended to overshoot its long-run equilibrium following an unexpected change in Chinese steel prices.

Suggested Citation

  • Mark Caputo & Tim Robinson & Hao Wang, 2013. "The Relationship between Bulk Commodity and Chinese Steel Prices," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 13-18, September.
    • Handle: RePEc:rba:rbabul:sep2013-02
    as

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    File URL: https://www.rba.gov.au/publications/bulletin/2013/sep/pdf/bu-0913-2.pdf
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    References listed on IDEAS

    as
    1. Pagan, A.R. & Pesaran, M. Hashem, 2008. "Econometric analysis of structural systems with permanent and transitory shocks," Journal of Economic Dynamics and Control, Elsevier, vol. 32(10), pages 3376-3395, October.
    2. James Holloway & Ivan Roberts & Anthony Rush, 2010. "China's Steel Industry," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 19-26, December.
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    Cited by:

    1. Kim, Yoochan & Ghosh, Apurna & Topal, Erkan & Chang, Ping, 2023. "Performance of different models in iron ore price prediction during the time of commodity price spike," Resources Policy, Elsevier, vol. 80(C).
    2. Yoochan Kim & Apurna Ghosh & Erkan Topal & Ping Chang, 2022. "Relationship of iron ore price with other major commodity prices," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 35(2), pages 295-307, June.

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