Analyzing the implications of low-level fluctuations in the price ratio between steel products and iron Ore

In ferrous commodity investing, analyzing the price ratio between steel and iron ore (commonly referred to as the "steel-to-ore ratio") serves as a critical strategic tool. It is primarily used to assess profit distribution across the industrial chain, identify price trends, and uncover arbitrage opportunities.

Over the past decade, the rebar-to-ore ratio has generally fluctuated within a range of 4 to 9 (Fig.1). At present, this ratio sits at a historically low level. This article reviews the key factors behind the decline and provides a short-term outlook on its future trajectory. Overview of the Steel-to-Ore