Copper Pricing. Weakly Efficient Market Mechanisms And Neural Network Pricing Model

Copper as the basic national economic development's industrial raw materials, with the rapid development of China's national economy, its consumption has also got rapid growth, mainly by the characteristics of China's economic development decisions. In the economic recovery, the economy tend to rely on the start the expansion of the size of the country's infrastructure, resulting surge in demand for copper; In the economic upsurge of the period of rapid growth of consumer price index high, directly stimulate the demand for copper. China's copper exports of downstream products generally higher proportion of China's total exports of mechanical and electrical products accounted for 39%, wire and cable, consumer electronics, electrical appliances, hardware, light industry and so on, has always been export. With the increase in exports of downstream products will directly stimulate domestic copper consumption. Therefore, increase in exports of copper consumption, especially consumption of copper has a certain impact. The application of copper in the downstream industry, mostly in the form of copper used in recent years, a large number of China's copper imports to offset the direct consumption of refined copper, so copper consumption structure has undergone major changes. China's copper lack of effective capacity, and no new large-scale copper projects, and only a very small number of medium-sized copper projects, so in the next few years, the rapid increase in copper production is difficult. In this way, China needs to import directly from a large number of copper, refined copper consumption, and thus have a great impact.International copper consumption in 2008 reached 18.109 million tons, of which China's copper consumption amounted to 4.9 million tons, accounting for global copper consumption of 27.1%, had replaced the United States as the world's No.1 copper consumer, in January 2009 to February, China's apparent consumption of copper has reached 1.057 million tons, while the global copper production over the same period was only 2.927 million tons is also accounted for global copper consumption,36.11%, which marks the international copper market in China has become the most important part, and, with the the further development of the national economy, as well as further economic globalization, China's copper supply, consumption and international markets, forming an increasingly close linkage relationship, but because of domestic and international markets, copper prices affect the formation of a complex variety of factors volatile and volatile copper prices is inevitable, this price volatility is bound to supply and consumers, production and interests of the operators have a major impact, in severe cases can affect the healthy development of the national economy. So, into the futures market to avoid price risk has become a consumer of copper supply, production and operator of the inevitable choice. From the historical experience of developed countries, the futures market will become the core of the market system of copper and its price discovery, to avoid price risk, risk investment and the rational allocation of resources to promote the circulation of commodities in China will be the basic functions of the copper supply and consumption, production and operations play an active role in promoting.This paper is focus on Shanghai copper futures market pricing mechanism and pricing models as the main line, detailing the domestic futures market price discovery mechanism for the effectiveness of this market have been tested, and the use of advanced neural network technology to the Shanghai Futures Exchange copper prices running period proposed a reliable model and forecasts. Because only a non-fully and effectively in the market conditions, we have done all the models and forecasts is reliable, otherwise, the prices have to reflect all market information, our efforts are no longer meaningful. By walk model and the cointegration model of a double inspection, we found that Shanghai copper market after nearly 20 years of development, has not yet become a fully efficient market, Shanghai copper futures market efficiency is only to satisfy the first condition, that is the spot market can cointegration relationship exists, but does not meet the important co-unbiased estimation of the whole equation of conditions and the residual sequence of items not related to the conditions, so that the Shanghai copper futures market, there are still factors of non-active ingredients.Although we use artificial neural network to Shanghai copper futures pricing has achieved some results, but do not themselves have causal explanatory power, using neural networks to predict the price of copper, even with a higher accuracy rate, it can only show that neural network model of the independent variables with a view to a certain extent the relationship between prices exists, but does not mean that the model variables that affect prices as a direct factor. The selection of independent variables, most of them are dependent on people's subjective experience, and there is no objective criteria only if a parameter is set properly, the model results will be completely different from the accuracy of their forecasts is likely to be uncertain or have the larger fluctuations. Therefore, this work is preliminary, involving the application of still have a long way to go, given the author's own level of knowledge, ability and time constraints, both algorithms per se, or the application of the algorithms are still a lot we can explore place. In practice, we still can only use artificial neural network as a copper price forecasting methods one of which should not be the only one. Should still be using a wider range of methods and tools as complementary methods to improve and perfect the artificial neural network to Shanghai copper futures forecasting capabilities.