# Iron ore: Correlation Prices it moves with, and why Source page: https://www.materialinsights.org/commodities/iron_ore/correlation/ Iron ore is shipped mainly from Australia and Brazil to Chinese steel mills, so Chinese steel output and property construction set the price. It trades on Singapore and Dalian futures and on index-linked contracts. Market price **World Bank Pink Sheet: Iron ore, cfr spot** $/dmtu · monthly, Jan 2006 to Sep 2026 #### What its price moves with Selected link ##### Iron ore and Steel Monthly changes 0.07 little or none correlation 12-month changes 0.32 weak correlation Last 5 years -0.20 monthly changes Lead or lag −2 mo Iron ore tends to lead by 2 months (r 0.28) Price function, Jan 2006 to Sep 2026 Iron ore ≈ 6.71 × (Steel)^0.50 R² 0.14 On this fit, a 10% higher steel price goes with a 4.9% higher iron ore price over the long run. Units: $/dmtu and index, BLS base period. The fit is loose, so treat the function as a rough guide. Chart: Iron ore and Steel prices rebased to 100 at Jan 2006, log scale Both prices rebased to 100 at Jan 2006, on a log scale so equal percentage moves look the same size. Chart: Iron ore price against Steel price, monthly, log scales, with fitted line Each dot is one month; paler dots are older (2006), darker dots recent (2026); the ringed dot is the latest month. The dashed line is the fitted price function. Both axes are logarithmic. Commodity [St Steel](https://www.materialinsights.org/commodities/steel/)Main use 0.07 Almost all iron ore is smelted into steel, so mill output and margins in China decide demand. The steel index here is for the US, where mills mostly melt scrap, so monthly moves hardly correlate (0.07) and yearly ones correlate at 0.32. little or none co-movement month to month · 249 months Show charts Energy [Kc Coking coal](https://www.materialinsights.org/energy/coking_coal/)Co-input 0.27 Blast furnaces need iron ore and coke together, so both follow Chinese steel output and restocking. The coking coal series here is a thermal coal proxy, which correlates with iron ore at 0.27 monthly and 0.37 yearly. weak co-movement month to month · 249 months Show charts Commodity [Cu Copper](https://www.materialinsights.org/commodities/copper/)Common driver 0.41 Both metals depend on Chinese construction and infrastructure spending, so property slowdowns hit them together. Monthly changes correlate at 0.41 and yearly at 0.69, a common-driver link rather than an input one. moderate co-movement month to month · 249 months Show charts Energy [Tk Tankers, barges and fuel trucks](https://www.materialinsights.org/energy/e_tankers/)Freight cost 0.01 Iron ore is the largest dry bulk cargo, and freight from Brazil to China is a big part of the delivered cost. The proxy is a US deep-sea freight index that shows no monthly correlation (0.01); a dry bulk freight index would fit better. little or none co-movement month to month · 249 months Show charts Chemical [H2 Hydrogen](https://www.materialinsights.org/chemicals/hydrogen/)Future reductant −0.06 Green steel plans use hydrogen to reduce high-grade iron ore pellets directly, which would raise the premium for high-grade ore. Today the hydrogen index is a US industrial gas price and shows no link with ore (-0.06 monthly). little or none co-movement month to month · 208 months Show charts How to read these numbers **Correlation of monthly changes** (the number in the coloured pill) compares how much each price moved, month by month, since 2006 or the first month both series exist. It runs from −1 to +1: near +1 the two usually rise and fall in the same months, near 0 there is no link, and a negative number means they tend to move in opposite directions. Above 0.7 is strong, 0.4 to 0.7 moderate, 0.2 to 0.4 weak. **12-month changes** compare year-on-year moves, which shows whether two prices share the same cycles even when the month-to-month noise differs. **Price function** is a straight-line fit of the two prices on logarithmic scales: price ≈ k × (partner price)^β. β is how much this price moves, in per cent, for a 1% move in the partner over the whole period, and R² is the share of the variation the fit explains. Two prices that both drift up with inflation can fit well without any real link, so read it together with the monthly correlation. **Lead or lag** checks whether the monthly correlation is clearly higher when one price is shifted by 1 to 6 months. Correlation is not cause. The reasons on each card explain the economic link; the numbers show how strongly it has shown up in prices. Proxy series are US producer price indexes or related prices and can blur the real link. Data: World Bank Commodity Price Data (Pink Sheet), October 2026; US Bureau of Labor Statistics producer price indexes, IMF primary commodity prices and US EIA prices via FRED, Federal Reserve Bank of St. Louis, retrieved November 2026. Calculations by this site. ## Other sections - [Summary](https://www.materialinsights.org/commodities/iron_ore/index.md) - [Overview](https://www.materialinsights.org/commodities/iron_ore/overview/index.md) - [Extraction](https://www.materialinsights.org/commodities/iron_ore/extraction/index.md) - [Production](https://www.materialinsights.org/commodities/iron_ore/production/index.md) - [Stocks](https://www.materialinsights.org/commodities/iron_ore/stocks/index.md) - [Cycles](https://www.materialinsights.org/commodities/iron_ore/cycles/index.md) - [Trading](https://www.materialinsights.org/commodities/iron_ore/trading/index.md) - [Movement](https://www.materialinsights.org/commodities/iron_ore/movement/index.md) - [Criticality](https://www.materialinsights.org/commodities/iron_ore/criticality/index.md) - [Characteristics](https://www.materialinsights.org/commodities/iron_ore/characteristics/index.md) - [Emissions](https://www.materialinsights.org/commodities/iron_ore/emissions/index.md) - [Relationships](https://www.materialinsights.org/commodities/iron_ore/links/index.md)