Yiqun Ma, Wei Zhen
The presence of iron ore spot prices has raised the question whether iron ore spot prices are driven by market fundamentals. We analyse iron ore spot prices over the period 2014–18 while considering a structural break. The results show that China's steel production only affects the volatility of iron ore spot prices. Over the two subsample periods, the mean and volatility of iron ore spot prices are vulnerable to changes in port stock. Overall, in determining iron ore spot prices, the effect of supply fundamentals outweighs that of demand fundamentals. [ABSTRACT FROM AUTHOR]