Deciphering iron ore trade dynamics: Supply disruption risk propagation in global networks through an improved cascading failure model

Chao Wang, Hua Yang, Xiaoqian Hu, Xijun He, Junge Liu, Chen Liang and Ming K. Lim

Resources Policy, 2024, vol. 95, issue C

Abstract: In recent years, the global dependence on iron ore, a vital strategic resource, has faced unexpected disruptions caused by geopolitical events and widespread health crises. This study investigates the dynamic evolution of the worldwide iron ore trade network from 1991 to 2020 to provide trading nations with effective strategies for reducing supply disruption risks. The classic cascade failure model is modified to incorporate risk absorption and adaptation capacities, allowing it to simulate the dynamic spread of iron ore supply disruption risk. This approach improves the model by considering a country's ability to reduce risk through alternatives, production adjustments, and other measures. Additionally, the redistribution ratio is calibrated using both original trade volume and key trade drivers. The results emphasize the importance of factors such as urbanization rate and industrial structure as the main drivers of global iron ore trade. Furthermore, the study finds that supply disruptions from major exporters like Brazil, Australia, and Canada have a significant impact on the trade network, especially affecting resources and economies in eastern and south-eastern Asia and Europe due to geographic trade constraints. To ensure the stability of global iron ore trade, the study proposes effective strategies, providing valuable policy insights for various nations.

Keywords: Global iron ore trade; Trade network; Supply disruption risk; Cascading failure model (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jrpoli:v:95:y:2024:i:c:s0301420724005245

DOI: 10.1016/j.resourpol.2024.105157

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