International Steam Coal Market Integration

This paper examines the hypothesis that there is a single economic market for the international steam coal industry and investigates the degree of steam coal market integration over time. The long-run relations between international steam coal prices are tested through cointegration analysis and the Kalman Filter analysis is employed to examine the convergence path of the price series. A regression test of convergence is employed to test for group convergence within a panel of steam coal exporting countries. Monthly F.O.B. prices for Australia, China, Colombia, Indonesia, Poland and South Africa between January 1995 and July 2007 are considered. Using three different tests, we obtained a consistent conclusion – the international steam coal market is generally integrated. * The author is a Ph.D. candidate in the Department of Economics at Macquarie University, Australia. Email: [email protected]