Analysis on Cooperative Game of Iron Ore Price Negotiations

In recent years, with rapid development of Chinese economy, China has more and more demands for iron ore, the foreign iron ore dependency rate has reached 70%. Iron ore price increases great high, which has a greater impact on Chinese steel enterprises and the national economy as well. Unlike the other international bulk stock market, iron ore supply market is not only a classic market, but also lacks a corresponding derivatives market. Therefore, iron ore price is decided mainly by negotiations. From the perspective of cooperation, the paper uses cooperative game theory to analyze the problem about iron ore price negotiations and gives the best strategy that Chinese steel enterprises should take in the price negotiations. That is obtains the alliance conditions between Chinese steel enterprises and iron ore supply manufacturers, furthermore, we can measure the distribution of benefits derived from the Union for China´s steel enterprises. Finally, the paper gives some suggestions for Chinese steel enterprises to participate in the cooperation of international iron ore market.