Commodity Price Index Building Based On Supply Chain Cost Reduction

Raw material costs are an important part of the supply chain, with the increase degree of China's economic globalization. The national commodities, for instanse, oil, soybeans, iron ore and other raw materials are in great demand, but because of the lack of commodity pricing, commodity prices as these huge fluctuations in our supply chain causes a significant impact, and we suffer a great loss. How to compete for national commodity pricing to reduce our supply chain cost of raw materials, to avoid the volatility of international commodity prices are more and more important in China's economic development and also causes the national management's attention. Therefore, on the current economic environment, the research on supply chain costs needs from the past that focused on the internal business and individual enterprise to the supply chain as a whole, so we can control the source costs.Establishing a scientific commodity price index can promote the formation of China's commodity pricing, which can effectively reduce our supply chain costs. In this article, natural rubber and copper are taken for example. Firstly, the factors affecting commodity prices is divided into three parts, namely supply and demand, financial attributes and quality characteristics, and the financial attributes and quality characteristics is pre-treatmented by principal component analysis. Secondly the Hedonic Model and the combination of stepwise regression method is used to establish the indexes:P2/P1index and P2-P1 index. Thirdly the index is used to analysis the supply and demand of China's natural rubber market changes.Finally, copper goods is taken for example to generate three series of price index. At the last of empirical analysis, the price index is generated and compared with the supply and demand, respectively, with China's PPI index and other indexes to find that the index was created with good practical value and pioneering.