The Influence Of The Imported Iron Ore Price On China’s Downstream Steel Product Prices,Illustrated By The Example Of Rebar Price

Iron and steel industry,a typical upper-mid stream industry,is the basic sector of China’s national economy.Since 2000,as the development of China’s urbanization and industrialization is speeding up,China’s iron and steel industry has ushered in a flood of unprecedented opportunities.From 2001 to 2008,China’s crude steel output grew at an average annual rate of 20%,and its share of global crude steel production increased from 17.8% to 38.2%.China’s position in the world steel industry has improved significantly over the past decades.As the key raw material for steel making,iron ore resource ranks at the second strategic position of bulk commodities after crude oil,and it is directly related to the costs of steel production and the lifeblood of the national economy.In 2003,China was over Japan,being the largest iron ore buyer in the world and known as the“Global Magnet”.In 2018,China imported 1.038 billion tonnes of iron ore,of which89.5% were from Australia and Brazil.Under this background,this paper elaborated the importance of imported iron ore in China’s iron and steel industry by analyzing the historical data of China’s steel sector as well as the imported iron ore sector over the past two decades.In use of the method of induction,the reasons of the price trend of imported iron ore was analyzed from the perspective of supply and demand.Then rebar,which is the most popular steel product and the most widely used for construction,was selected as an example to study the decisive effect of imported iron ore price on the cost of rebar.Finally,by using VAR model and Impulse Response Function,this paper demonstrated the contribution rates of imported iron ore price,Tangshan second-grade coke price and the house price index to rebar prices through empirical analysis.As a conclusion,it showed that the house price index,acted as the demand side,has the greatest impact on rebar spot price.At the end of this paper,it puts forward feasible suggestions on how China’s steel enterprises and steel industry should respond to the drastic changes in the international iron ore market.