Supply shock propagation in the multi-layer network of global steel product chain: Additive effect of trade and production

Abstract

The key to resource security is to make sure supply safety. Due to the difference of resource endowment, however, the distribution of global production and consumption is not matched, so that the supply shock can spread within the multi-layer formed by global supply chains. Therefore, understanding how supply shock spreads within the multi-layer network is critical for policy makers to prevent the propagation of resources crisis. From the perspective of global steel product chain, we constructed a supply shock propagation model based on a multi-layer network and simulated the propagation effect using the steel chain trading data. Results show that: (1) No matter how large the impact strength, only a few countries such as Russia, Ukraine, Brazil and Australia, once the supply shortage of steel upstream products occurs, can affect the downstream products of most countries in the world. (2) If the country's risk resistance is extremely weak, the supply shock propagation in the pig iron network is dominated by trade relations, while crude steel network is dominated by production relations, and steel product network is dominated by the coupling relationship between trade and production. (3) Faced with the risk of complete interruption of exports from different risk sources, the critical points of infection thresholds in importing countries are different. (4) The propagation path of supply risk in the multi-layer network of steel trade presents a multiple hub radial network structure with key countries as the core. These findings help policy makers adjust trade policies in a timely and scientific manner.