Analysis Of Factors Affecting Ocean Freight Of Iron Ore

The objective of this thesis is to support iron ore and shipping company in their decision making related to iron ore transportation and freight rates. This study explores the determination mechanism and the factors attributable to the fluctuation of iron ore freight rates.The iron ore shipping market is one vital part of international dry bulk freight market. The overseas transportation of iron ore and coal (coke), the main raw material for the production of iron and steel, is the biggest amount in the dry bulk shipping market. Due to the specialities of iron ore price negotiations, the freight rates of this cargo is the main uncertainty factor in the cost of steel makers after the reference price is settled. To choose a right time for shipment is a very importance matter of iron ore buyer, since the freight rates of that cargo fluctuates in a large range. Therefore, knowing and grasping effectively the determination factors of iron ore freight rates will greatly enhance the profitability of the iron ore market and relate market participant.The main body of this thesis can be divided into four parts.Part one includes chapter one and chapter two, which mainly making a brief introduction of this research back ground and its research purpose, pointing out the principle of studying framework, reviewing the main theory and method on dry bulk shipping market, and then raising the purpose of this study.Chapter three is the second part of the study, briefly explains the steelmaking process and their main sources in the international market. Then the thesis focuses on identifying the main iron ore producers and consumers, and their importance to the seaborne trade of this commodity.The third part is chapter four of this thesis. Descriptive discussions about the determination mechanism and influencing factors of freight rates in dry bulk shipping market, which focus specifically on the classification, the characteristics, and the supply-demand relationships of the market, are conducted first.Part four includes chapter five and chapter six, which introducing the econometrics model for the development of the analysis, and analyzes quantitatively the inter actions among iron ore freight rates and those factors contributing to its fluctuation. This part of the study also gives the long-term trend of iron ore freight and seasonal factors, and use VAR(p) model to estimate the long-term relationships among the variables.Chapter seven is the summary and prospect of the thesis. It summarizes the total contend and puts forward shortcoming of the thesis.