Study On International Price-setting Power Of China's Iron Ore Trade

Iron ore is the most basic metallurgical and has the greatest demand in China's steel industry. It's one of the major strategic materials indispensable for the development of our national economy. Due to the severe insufficiency of the resource and great increase in the import of iron ore, China has become the consumptive importing country. With the consistent and stable growth in economy, China will have more demand of iron ore and the gap between supply and demand will enlarge. In recent years, the continuous increase in iron ore's global price has had direct impact on the domestic iron ore market, steel and downstream industry, and has made our situation of overseas purchase and strategic arrangement more serious. Therefore the topic of China's price-setting power on iron ore has aroused great concern among people from all circles, especially experts and scholars home and abroad.This thesis focuses on the analysis of iron ore production and trade situation, emphasizing the phenomenon that China has poor international price-setting power. It also tries to find out why we are in lack of the power with both demonstration and theory analysis and through setting up positive and negative SDI model, and tries to seek the countermeasure for winning the international price-setting power based on the experience of Japan.The thesis starts with an overall analysis on international iron ore market with quite a few data and graphs, illustrates respectively the international and Chinese iron ore production and trade, and sets up China's International Trade Model of Iron Ore with emphasis on the situation of China's lacking international price-setting power.Then the thesis makes a study on international iron ore market about the operation mechanism, the structure and the behaviors between the supply and the demand, and states the rival between the supply and the demand is actually a competition between the oligarch and steel enterprises who are highly separated and competitive.Next by setting up Negatively Controlled SDI Model, this thesis figures out three layers of the reason why China has poor international price-setting power, which are the demand factor, the status factor and the international price factor, and makes a deep and detailed analysis of the three factors.Finally, based on the experience of Japan for reference, and by constructing Positively Controlled SDI Model and exerting the crucial function of the demand factor, this thesis puts forward countermeasures for winning international price-setting power, which includes getting rid of backward productivity, fastening the re-arrangement of steel industry, formalizing the iron ore trade order, establishing international purchase combo, expanding upstream industry and import channel, opening up more mines overseas, developing futures market and setting up international price-setting center.