Document Type: Case Study

Authors

School of Industrial Engineering & Management, Shahrood University of Technology, Shahrood, Iran

Abstract

This study aims to estimate the function of copper consumption using the Johansen approach in time series data, between 1991-2011 in Iran. The literature review of specialized consumption and demand functions shows factors influencing the consumption of copper including copper price variables, aluminum price as a substitute commodity, oil price as a complementary commodity, and industrialization intensity. For this purpose, raw data from the World Bank and International Copper Study Group, were used to extract the initial data needed for the current study, and then research variables were calculated and applied in a seasonal manner. In the next stage, using vector autoregressive, Johansen cointegration test, and vector error correction model, the existence of long-run cointegrated equilibrium relationship was surveyed by vector error correction model. Model estimation results show that there is a positive correlation between between industrialization intensity variable and the price of substitute product (Aluminum) and copper consumption ratio Moreover, there was a significant negative correlation between copper prices and complementary commodity price (Oil), during the review period in Iran. It should be noted that aluminum and copper prices can impact the copper consumption, and an awareness of this can influence making copper sales contracts domestically and abroad.

Keywords