Abstract
In this paper, we use a predator–prey model to simulate intersectoral dynamics, with the global steel sector as the prey that supplies inputs and the automotive sector as the predator that demands its inputs. A further prey, an additional upstream supply sector, namely the iron ore sector, is added to reflect the implications of scarcity and resource limitations for industrial development and economic prospects. We find that capacity constraints in the steel industry could limit the future supply of vehicles, a result exacerbated by the unsustainable use of iron ore reserves. The solution is not for marginal steel industries to close, but for steelmakers to adapt and move to less resource-demanding secondary steelmaking technology rather than focusing on primary steelmaking. The forecasting capabilities of the model are compared with the outputs from a neural-network model. Although the results are comparable over the short term (±10 years), over the long term, results diverge, showing that forecasting steel-industry dynamics is complex and that further work is required to disentangle the drivers of supply and demand. This study indicates the potential advantages of using predator–prey models in modelling the supply chain in economics.
Highlights
The predator–prey model was found to be suitable for use in system dynamics models (Swart, 1990), we found few explicit applications in the field of economics
Iron ore availability acted as a constraint to future expansion of the steel sector
The boom days of the steel sector meant that excess capacity existed
Summary
According to Gross, such growth is due largely to the growth in vehicle ownership in the developing world. This has consequences for climate change, as well as for public health and safety, and gives rise to environmental concerns relating to acid rain and congestion. The effect of rising vehicular traffic meant that the global steel industry experienced significant growth in the past This has continued in spite of the financial crisis. Production grew by, on average, 6.35 per cent year on year between 1998 and 2007, and, production has fallen since the financial crisis, growth has remained at 3.33 per cent on average per annum This is in spite of low profitability threating to close certain plants (Bowler, 2016). Even with dampened demand for steel following the financial crisis, production growth remains strong in relation to other sectors
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