# Steel: Correlation Prices it moves with, and why Source page: https://www.materialinsights.org/commodities/steel/correlation/ Steel prices depend on construction, cars and machinery, on iron ore, coking coal and scrap costs, and on trade policy. This series is the US steel mill products index, where tariffs and scrap-based electric furnaces make prices partly domestic. Price index **US producer price index: steel mill products** index, BLS base period · monthly, Jan 2006 to Sep 2026 #### What its price moves with Selected link ##### Steel and Iron ore 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 Steel ≈ 61.0 × (Iron ore)^0.28 R² 0.14 On this fit, a 10% higher iron ore price goes with a 2.7% higher steel price over the long run. Units: index, BLS base period and $/dmtu. The fit is loose, so treat the function as a rough guide. Chart: Steel and Iron ore 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: Steel price against Iron ore 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 [Fe Iron ore](https://www.materialinsights.org/commodities/iron_ore/)Feedstock cost 0.07 Blast furnaces turn iron ore into iron, so ore prices set much of integrated mills' cost worldwide. US mills rely more on scrap and tariffs shield them, so monthly correlation with seaborne ore is just 0.07 and yearly 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/)Feedstock cost 0.17 Coke from coking coal fuels and reduces iron in the blast furnace. Using the thermal coal proxy, yearly changes correlate at 0.67 though monthly moves only at 0.17, as US prices react with a lag to global raw material swings. little or none co-movement month to month · 249 months Show charts Energy [HI Energy-intensive industry](https://www.materialinsights.org/energy/e_heavy_industry/)Electricity cost 0.09 Electric arc furnaces, which make most US steel from scrap, are large power users, so electricity is a key cost. The industrial power index correlates at only 0.09 monthly and 0.29 yearly, because power contracts and steel prices reset on different schedules. little or none co-movement month to month · 249 months Show charts Energy [Gas Natural gas](https://www.materialinsights.org/energy/natural_gas/)Energy cost 0.09 Gas fuels reheating furnaces and direct-reduced iron plants, and gas shocks raise steel costs, especially in Europe. Monthly changes barely correlate with European gas (0.09), but yearly changes correlate at 0.75 through the shared inflation cycle. little or none co-movement month to month · 249 months Show charts Commodity [Ni Nickel](https://www.materialinsights.org/commodities/nickel/)Alloy input 0.04 Stainless and many alloy steels need nickel, and stainless surcharges pass nickel prices on to buyers. Because the index is dominated by carbon steel, the link is weak: monthly moves correlate at 0.04 and yearly moves at 0.31. little or none co-movement month to month · 249 months Show charts Chemical [H2 Hydrogen](https://www.materialinsights.org/chemicals/hydrogen/)Green reductant −0.02 Hydrogen-based direct reduction is the main route proposed for low-carbon steel, replacing coke in ironmaking. It is still small, and the hydrogen index is a US industrial gas price, so there is no correlation yet (-0.02 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/steel/index.md) - [Overview](https://www.materialinsights.org/commodities/steel/overview/index.md) - [Extraction](https://www.materialinsights.org/commodities/steel/extraction/index.md) - [Production](https://www.materialinsights.org/commodities/steel/production/index.md) - [Stocks](https://www.materialinsights.org/commodities/steel/stocks/index.md) - [Cycles](https://www.materialinsights.org/commodities/steel/cycles/index.md) - [Trading](https://www.materialinsights.org/commodities/steel/trading/index.md) - [Movement](https://www.materialinsights.org/commodities/steel/movement/index.md) - [Criticality](https://www.materialinsights.org/commodities/steel/criticality/index.md) - [Characteristics](https://www.materialinsights.org/commodities/steel/characteristics/index.md) - [Emissions](https://www.materialinsights.org/commodities/steel/emissions/index.md) - [Relationships](https://www.materialinsights.org/commodities/steel/links/index.md)