An Analysis On Pricing Mechanism And Pricing Power Of China's Imported Iron Ore

Based on the mad rising price of international iron ore and the lack of pricing power, this paper deeply and comprehensively analyses the price mechanism and pricing power in the view of supply-demand, market structure, popular pricing method and price negotiation of imported iron ore. Then this paper gives some applicable strategy and suggestion in the end.Through the statistical description method, this paper use arranging data and lots of evident charts to analyse the iron ore supply and demand condition of iron ore abroad and domestic. The conclusion is the gap between supply and demand has been increasing yearly, and only imported form overseas such as Australia and Brazil can meet this need. This paper also get the fact that the degree of iron ore import dependence is too high through theoretical analysis, which is harmful to our country's industry safety. Through the analysis of market characteristics of iron ore, obtain a result that sell market of iron ore has advantage of oligopoly, while china's iron ore market is competitive and has a extremely low degree of industrial concentration. In this market, seller must be the leader of iron ore pricing, and as a buyer, china must be a follower.Base the supply-demand theory and game theory, this paper uses the econometrics model in short term and long term, believes the iron ore imported price will fall in short term because china's huge iron ore demand, but in long term, the huge demand may lead the price to go up more. This paper also uses bargaining model and thinks the patience has a decisive impact on the negotiated price. Using empirical analysis to summarized the current pricing methods of four iron ore companies, then points out that index pricing has became an irreversible trend. This paper studies the iron ore negotiated process thought comparative analysis, thinks the lose of first pricing and the negotiation failing are the results of spy and bribe and two different iron ore price in Chinese market.This paper makes some suggestion and strategy to china's steel company, industrial association and our government from different angles of supply, demand, negotiation power and pricing mechanism, based on deep analysis of iron ore supply-demand, market structure, reasons of failed negotiation and international iron ore pricing methods. I hope these policies can help china to obtain the iron ore pricing power at an earlier date.