Factors affecting industrial coal demand in Turkey

Abstract

The aim of this paper is to investigate the factors affecting industrial coal demand by using an econometric model. Industrial coal demand, both short term and long term, was examined with Autoregressive Distributed Lag Bounds Testing by using the annual data for the years 1985-2016 in Turkey. The variables of the model established in this context include: steam and coking coal consumption in the industrial sector; the price of steam and coking coal; real income per capita; heating degree days showing the climatic conditions; and the urbanization rate. In long-term analyses, industrial coal demand was found to be negatively and significantly affected by the price of coal and heating degree days, and positively and significantly affected by income. According to Autoregressive Distributed Lag analysis, for the steam coal demand model, the long-run income and price elasticities were calculated as 2.97 and -2.33, respectively. For the coking coal demand model, income elasticity was calculated at 1.88, in the long run. The price elasticity of steam coal demand was estimated to be smaller than 1 in short-term analyses. The results indicated that coal demand has negative and positive price and income elasticities, respectively.