The Impact Of Iron Ore Price Uncertainty On The Profits Of Listed Enterprises

Iron ore is one of the most important upstream raw materials in the iron and steel industry chain.In recent years,due to the drastic change of supply and demand pattern and the influx of financial speculative capital,iron ore price presents a strong uncertainty,and the long and short game is very fierce.For enterprises in the middle and lower reaches of the iron and steel industry chain,on the one hand,due to the existence of price stickiness,enterprises cannot flexibly adjust product prices,so the uncertainty of the price of raw materials will affect the normal production and operation of enterprises.On the other hand,due to the existence of financial friction,the fluctuation of corporate cash flow and corporate net worth caused by the uncertainty of raw material prices will lead to the increase of financing cost and financing difficulty of enterprises,which will have a negative impact on enterprises.The empirical study in this paper is based on the fixed effects panel regression model,and the time interval is from the first quarter of 2010 to the fourth quarter of 2020.The research objects are 247 listed enterprises in the middle and lower reaches of China’s iron and steel industry chain,including 52 Citic level 3 industries such as plate,construction machinery,housing construction,infrastructure construction and passenger vehicles.This paper uses platts iron ore price index conditional variance data to measure iron ore price uncertainty,and investigates the impact of iron ore price uncertainty on the profits of enterprises in the middle and lower reaches of China’s iron and steel industry chain.This paper draws the following conclusions: First,the increase of iron ore price uncertainty has a significant negative impact on the profits of listed enterprises in the middle and lower reaches of China’s iron and steel industry chain.Compared with Indian mines,the price uncertainty of Australian mines has a stronger impact.Second,the rise of iron ore price uncertainty has a stronger negative impact on enterprises with low industry concentration and competitive position,which supports the existence of price stickiness theory.Third,the rise of iron ore price uncertainty has a stronger negative impact on enterprises with high asset-liability ratio and high interestbearing debt ratio,which supports the existence of financial friction theory.Fourth,the increase of domestic mine output can reduce the negative impact of price uncertainty on corporate profits,but it does not pass the significance test.The increase of import concentration degree weakens the negative impact of price uncertainty on corporate profits.This study supplements and expands the relevant research on iron ore price uncertainty and corporate profits.The conclusion of this paper provides empirical evidence for regulators to suppress the large fluctuations of iron ore prices,which is of great significance to prevent the profit squeeze of China’s middle and lower manufacturing enterprises and realize the stability of the supply chain of China’s steel industry.