ARTICLE
ABSTRACT
The article presents the analysis of the relations between the demand for steel products and the prices of steel and raw materials (coking coal) on the European market based on the monthly data in the period 2003-2011. The analysis of those relations was conducted with the use of Structural Vector Error Correction Model (SVECM), which allowed to determine the impact of the supply of raw materials and the demand for steel products on the prices of steel products. The results obtained indicate that steel market is in long run equilibrium. The price of coking coal is the dominant variable in the system, and the prices of crude steel depend on the prices of raw materials and the demand for steel products. The price of steel is not the Granger cause for the remaining variables. As expected, the system reacts both to the increase in the demand for steel products and the increase in the prices of raw materials. The forecasts obtained using the model are valid enough and can be treated as reference points by the participants of the steel market.
KEYWORDS
causality, SVECM model, steel market, coke and steel prices
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