Model Of World Steel Demand - Multiple Regression

The aim of this paper is to define factors that crucially influence worldwide demand for steel. The main goal is to calculate multiple factor linear model that would explain the influence of individual variables in global demand for steel. At the same time, this method enables to evaluate mutual relation of individual variables and to define whether there are complements and substitutes for steel. Initial parameters of the model are based on common econometric model of demand. Those ones that represent 2/3 of world output are chosen from macroeconomic figures. These are particularly economies of the US, EU, China and Japan. The results imply that the data sample is not very suitable for complex multiple-factor regression. Nevertheless, this model clearly shows extreme interconnection of world economies and comparatively big sensitivity of demand for steel to random variable, represented by worldwide military expenditures. Positive factors include world production of coal and annual inflation in China. The negative factor is represented by the price of iron ore. These results show that the demand is mostly influenced by price and production of complements.