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Integration of international coal markets: an econometric analysis
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Social Sciences.
2008 (English)In: Enerday - Conference of Energy Economics and Technology, 2008Conference paper (Other academic)
Abstract [en]

The overall purpose of this paper has been to test the hypothesis of steam and coking coal markets being integrated into global markets. This has been conducted by analysing whether or not the quarterly steam and coking coal prices in Europe and Japan between 1980 and 2006 are cointegrated. The results for the entire time period show that neither the steam or coking coal markets are cointegrated, and thus we cannot conclude that the price series in Europe and Japan follow a long-run trend. This result does not confirm the existence of a world market for steam and coking coal, rather it indicates that these coal markets are separated into two regional markets. The finding of regional markets is in conflict with the finding in Wårell (2006), who found cointegrated steam and coking coal prices between 1980 and 2000. Before concluding that the steam and coking coal markets are regional in scope, cointegration analysis has also been performed for the separated time series 1980-1999 and 2000-2006. The results for the steam coal market shows that cointegration of the price series can be confirmed for the time period 1980-1999, but not for the period 2000-2006. The finding that the steam coal market cannot be considered cointegrated 2000-2006, i.e., that the market has become more regional in scope has important policy implications. Firstly, a more regional market implies that the competitive situation becomes different compared to a world market. Secondly, in order to identify any potential security of supply issue for coal, it is important to know whether the market is regional or world-wide.

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URN: urn:nbn:se:ltu:diva-34973Local ID: 94db1b20-a0f2-11dd-8f4e-000ea68e967bOAI: diva2:1008225
Enerday - Conference of Energy Economics and Technology : 13/04/2008 - 13/04/2008
Godkänd; 2008; 20081023 (linda_w)Available from: 2016-09-30 Created: 2016-09-30Bibliographically approved

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