Econometric Prediction On Crude Steel And Iron Ore Demand In China

As the main raw material of steel industry which is the important infrastructure of national economy, the supply and utilization of iron ore has significant effects on the development of the steel industry and national economy. The scientific prediction of iron ore demand is very helpful for establishing iron ore resources utilization strategy, and enforcing the sustainable development of national economy.The force that drives the iron ore demand is the needs of steel and iron and products manufactured with steel and iron due to the development of national economy. Therefore, the connection between iron ore and market is not in a direct way. Iron ore enters market through pig iron, crude steel and steel products. The iron ore market in China uniquely has an important kind of characteristics. That is in most cases an iron ore production enterprise belongs to a steel enterprise. Ore products enter directly into the latter. Trade between them is an inner deal without almost any connection with market. So the directly traded amount of iron ore is limited. Because of these two kinds of characteristics, when iron ore demand predicted, it is not adequate about the situation in China to connect economy with iron ore directly.But the use of iron ore is very unique in that it is only used for steel and iron. Steel and iron and their products are completely markedly. Therefore the thought in this article to predict iron ore is the following. Firstly, connect crude steel with national economy, establish crude steel demand prediction model, then according to iron-steel ratio and ore-iron ratio, and considering the factors such as the use of steel scrap and import of steel etc., calculate iron ore demand from crude steel demand.Establish the following models for prediction of crude steel demand,(1) Single-factor model. The single factor model established in this article has the growth curve function model and linearity function model. The growth curve function model adopts separately time and GDP as the independent variables. The result indicates that the growth curve function model using GDP as the independent variables has better simulation testing indicators. The single factor model using GDP as the independent variables and setting lag variables and dummy variables also has better simulation testing indicators.(2) Multi-factor gross model. There are two multi-factor models to predict crude steel demand in China. One uses calculated GDP composition with expending method as explanation variables, the other with manufacture method. The analysis result of the established models indicates the model based on expending account GDP possesses has better indicators of statistics testing, econometrics testing and prediction and assess testing. In the same time, the two-stage-model established is analyzed for this, model functions more suitable for actual situation are found.(3) Multi-factor SIU (intensity of use) model. Multi-factor SIU model established in this article takes steel use per GDP as dependent variable and ratios of the three industries (Primary Industry, Secondary Industry, Tertiary Industry) as independent variables, predicting gross crude steel demand by forecasting SIU.Because it is the steel production that decides the iron ore demand. Crude steel production amount must be got according crude steel demand for iron ore demand to be got further. So the prediction of crude steel import amount must be done. In this article, a simple steel production import prediction model is established to convert the predicted steel import amount to crude steel import equivalent according to finish steel product to crude steel ratio. Then calculate crude steel production amount from crude steel demand and import amount. Lastly, through systematically analyzing history data, data of iron-steel ratio, ore-iron ratio and steel scrap reuse and so on in China steel production is calculated. Combine these data with the mentioned crude steel production amount then get iron ore demand.Using the above mentioned models this article predicts crude steel and iron ore demand in China from 2005 to 2012, and analyzes and compares each model's result. The best predictions are selected as the final predictions. Prediction results indicate that in year 2005 to 2012 crude steel and iron ore demand is rising gradually, before 2010 it is still increasing rapidly, from 2010 to 2012 the increase speed will slow down; the predicted crude steel demand in China is 6.3390×108t, crude steel production 5.9374×108t, pig iron 5.8084×108t, iron ore gross demand(domestic produced original ore quality) 16.2634×108t, domestic iron ore output 4.5000×108t, import iron ore amount 5.8817×108t. According to the quality trait, production and trade situation of iron ore all over the world, and the prediction of iron ore demand in China, the strategy of China iron resource utilization should be the best balance of three sources of domestic ore mines supplement, abroad ore mines exploitation and ore import.The innovation of this article is that it captures the characteristics of closer connection between steel iron products and actual economy indicator and highly markedly extends of steel iron products, by combining the whole production procedure of steel iron industry establishes comprehensive and systemic prediction model from crude demand to iron ore demand. The prediction results not only produce iron ore demand but also crude steel demand, crude steel production and pig iron production amount.