Analysis of price interrelationships in the markets of raw materials and finished products of metallurgy in modern conditions based on statistical ratios

the objective of the present study is twofold: firstly, to test the general hypothesis concerning the infringement of correlation relations of prices in the domestic Russian and global markets; and secondly, to identify and select price indices of ferrous metallurgy markets characterised by a high degree of correlation dependence in conditions of transformation of market interrelations. The ultimate aim of this research is to construct a mechanism of formula pricing. The methods employed in the present study are correlation analysis methods, with a particular focus on the Pearson correlation coefficient (PCC). The PCC, being a dimensionless value, is a measure of the degree and directionality of linear stochastic dependence between two sets of data. Findings: The findings of the present study corroborate the hypothesis that, in the context of the transformation of markets for raw materials and finished rolled products, the conventional formula pricing mechanism – which previously relied on the close correlation between domestic and global markets – is no longer employed in contemporary pricing practice. In such conditions, it is necessary to actualize the historical interrelations of prices on different markets on the basis of the application of Pearson correlation coefficients. Furthermore, a ready list (matrix) of price pairs must be offered for further use in the formula for prices, guaranteeing stable correlation dependence of market price indicators of selected markets. The interrelationships between price pairs in various markets have been identified, paving the way for the creation of a comprehensive matrix of price correlations. This matrix will serve as a crucial component in the algorithmic design of contracts with formula prices. Conclusions: The hypothesis concerning the rupture of price links between the Russian and global markets post-February 2022 has been substantiated. In the context of the prevailing circumstances, the establishment of long-term contracts predicated on world agency quotations as constituent elements of formulations is deemed unfeasible. Consequently, a recalibration of the formula pricing instrument is imperative, with the initial phase entailing the formulation of a predetermined matrix of price pairs exhibiting stable correlations within the contemporary market environment. The price pairs with stable correlation have been identified and recommended for further use in building the mechanism of formula prices and independent price indicators. It was further recommended that the modified toolkit of formula pricing be utilized, incorporating the methods of linear averaging of quotations (by quarters) and synchronisation of price series with a shift of periods (by one or two quarters). This approach enabled the expansion of the composition of price pairs with stable correlation dependencies. The results obtained in this study provide a solid foundation for the further development of a new toolkit for formula pricing. This toolkit will be based on a ready-made matrix of price pairs, which is a key finding of the research.

prices, metallurgy, markets, formula pricing, price correlation, transformation of formula pricing toolkit, price pair matrix, independent pricing agencies