CHINA'S IRON ORE DEMAND PREDICTION MODEL AND ITS APPLICATION

An iron ore consumption forecasting model is formulated with consideration of the iron and steel making process and the growth curve of steel production in China.GDP is used as an explanatory variable in the growth curve model,instead of time.The iron ore consumption from 2006 to 2010 is predicted at different levels of China's peak steel production,and iron to steel ratios.The iron ore demand will rise from 726.18 million tons in 2004 to between 880.59 and 1066.3 million tons in 2010 under the low and high growth scenario used in this paper.The difference between these forecasts highlights the sensitivity of iron ore consumption to iron to steel ratio,and steel production.To reduce China's reliance on iron ore,China needs to use more steel scrap rather than iron to produce steel.