| The demand of international dry bulk cargo shipping market is dependent on thatof such dry bulk commodities as iron ore and coal. The changing freight flow of ironore is mainly affected by steel industry, as strong demand for steel could boostseaborne iron ore and then promote the development of dry bulk cargo shippingmarket which once contributed greatly to world economic growth. However, BDIindex, a leading indicator for world economy, has gone through a significant changeever since the financial crisis. Specifically, the relevance between BDI index andeconomic activities is declining, and some rare cases have even arisen where BDIindex deviates from the price tendency of steel and iron ore.In allusion to the above phenomenon, this paper inspects and studies therelationship between dry bulk cargo shipping markets and steel markets by means of aseries of research methods, such as correlation analysis, Granger Causality Test andcointegration analysis. Both quantitative research and qualitative research areconducted to comprehensively analyze recent co-movement relationships among steelspot market, steel forward market and dry bulk cargo shipping market.The empirical study in this paper confirms the correlation between internationaldry bulk cargo shipping market and both steel spot and steel forward markets. Inaddition, there exists a unidirectional causality between price movements of the steelforward market and dry bulk cargo shipping freight changes, which reflects that thesteel forward market has a relatively strong guiding function on the dry bulk cargoshipping market. Under the influence of complicated global economic circumstances,a stable long-run equilibrium has not ever formed between dry bulk cargo market andsteel spot and forward markets. But with the recovery of world economy anddeepening of globalization, the co-movement relationship between dry bulk cargoshipping market and steel markets will become increasingly intimate. |
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