Empirical Analysis Of China's Iron Ore Trade Prices

China became the largest iron ore importer in2003instead of Japan ininternational market, however, the right in pricing was not developed in proportion.There are several reasons for this phenomenon, mainly as follow: first, more than70%iron ore in supply is controlled by four companies worldwide: Brazil’s Vale,Australia’s BHP Billiton, Rio Tinto and FMG. The concentration ratio is so high thatthe international iron ore market is running as an oligopoly one. Suppliers are able tocontrol the price of iron ore base on the demand. Second, the pricing mechanism is onbehalf of suppliers, the suppliers can always reach their target price throughinternational iron ore negotiations and the index pricing mechanism. Third, theconcentration ratio of steel industry in China is unusually lower than other countries,and there is a rigid demand for iron ore during the Economic development. Under thissituation, China has been put at a serious disadvantage. Besides, the market of ironore futures in China hasn’t grown up acceptable by international groups makes Chinaeven more far away from pricing maker.The price of international iron ore has risen steadily since2003, in2012, theaverage price of iron ore is about four times of2003. In the year of2005, Chinarepresented by Bao Steel succeeded in taking part in the rank of iron ore internationalnegotiation, but the keep-increasing price after2005shows us the little influence ofChina in pricing mechanism. In the new century, iron ore becomes magic stonechased by international capital but nightmare for Chinese steel industry. However, asto the reason why increasing highly, China becomes the target, internationalresearchers say the huge demand of iron ore result from the rapid development ofChina’s Economic makes the international iron ore market over demand，which is themain reason for the price increasing. Although this saying is kind of extreme, wecan’t deny the influence of China on the price. In this article, SPSS software is usedto analyze how and what degree Chinese Factors such like industry, real estate effecton price of iron ore. We will display the effect with digital data in detail. In the end of the article, some measures are given to deal with the deficiency problem of China inpricing.