The import competition relationship and intensity in the international iron ore trade: From network perspective

Abstract

As a critical raw material, iron ore plays an important role in the development of the national economy, which results in intense competition between iron ore importers. Using the international iron ore trade data of the UN Comtrade from 2000 to 2015, this paper calculates the competition intensity between iron ore importers importing iron ore from the same exporters. The paper then constructs iron ore import competition networks with the importers as nodes, the import competitive relations as edges, and the competition intensity as weights of edges. Applying complex network theory, the paper analyzes the overall characteristics of the iron ore importing competition pattern, the import competition region and the main importing countries. The results reveal that the global iron ore import competition is tight, unbalanced and expanding and that the global iron ore import competitive pattern is moving from a core-periphery structure to a reticular structure. Although Australia and Brazil are both the main competition regions, the demand for Australian iron ore is more intense. The import competitive relations for iron ore exist primarily between Europe and Asia as well as intra-European and intra-Asian markets. The total import competition intensities between China and Japan and between China and South Korea are much larger than other competitive relationships with increasing trends from 2000 to 2015. We propose three policy recommendations for the importers: (1) diversifying the import channels; (2) enhancing the cooperation between importers; (3) investing in overseas equity mines to improve competitiveness.