Steel demand and steel consuming industries in China

This study analyzed the relationship between steel demand and supply in steel industry in China. Cointegration, vector auto regression (VAR), vector error correction model (VECM) and Granger causality are applied on yearly data set covering the period 1978-2005. The major findings of the paper are: (1) the apparent steel consumption is cointegrated with the machine-tool production and floor space of building under construction; (2) there are two-way Granger causality between steel consumption and the two steel consuming industries: machinery and construction.