Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/166437
Title: ESTIMATION OF DEMAND FUNCTION FOR STEEL REINFORCEMENT BARS IN SINGAPORE : AN EXPLANATORY STUDY
Authors: TSHUA NGEE
Issue Date: 1991
Citation: TSHUA NGEE (1991). ESTIMATION OF DEMAND FUNCTION FOR STEEL REINFORCEMENT BARS IN SINGAPORE : AN EXPLANATORY STUDY. ScholarBank@NUS Repository.
Abstract: The world glut of steel production in the eighties posed severe problems to the steel industry that must be resolved if the industry is to remain as a productive and profitable constituent of the world's industrial economy. From a global perspective, the industry must contend with uncertainty over future market growth, difficulties with international trade, the need to open new sources of raw materials, and the necessity to develop and apply new technology. This situation is especially pertinent to the local steel industry. With the above macro-economic scenario in mind, this study seeks to explore the usefulness of econometric techniques in an effort to uncover the basic determinants of Singapore's demand for steel reinforcement bars, a core product of the local steel industry. This study also attempts to make use of the models to project future demand trends and draw strategic implications for the local steel industry and related sectors. Using both the simple and multiple regression analyses, adjustments for multicollinearity and autocorrelation are made. We found that 94% or more of the variations in the domestic demand for steel reinforcement bars can be explained by local building progress payments. The price of locally produced steel reinforcement bars is also found to be a significant factor in determining the demand for high tensile deformed reinforcement bars. However, the results indicate that the demand for steel reinforcement bars is inelastic to both variables. The imported steel reinforcement bar price used as a 'substituting' price variable did not prove to be statistically significant to affect the demand for steel bars. The main reason, as argued in this study, is that foreign steel reinforcement bars could be 'dumped' into the Singapore market. This is also consistent with market observation. As a result, published statistics may thus fail to capture this observed phenomenon. However, it is believed that this 'substituting' price variable would indeed influence the ultimate demand for steel reinforcement bars, in particular, the high tensile deformed reinforcement bars from the local steel industry. Regrettably, we are unable to support it with appreciable econometric analysis. On the other hand, forecasted domestic demand growth of steel reinforcement bars appears to be rather pessimistic. The Gulf crisis has its definite impact on the economy as well as investment activities. Domestic growth rates projected based upon the estimated demand equations for the next four quarters of 1991 range between -4% to 2%. Hence, this study suggests that local steel industry could perhaps gear its attention towards export markets. They could also focus on the production of wire rods (another group of core products of local steel industry) for the local manufacturing sector.
URI: https://scholarbank.nus.edu.sg/handle/10635/166437
Appears in Collections:Bachelor's Theses

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