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January 29, 2015 - Weekly Pricing Pulse
The IHS Materials Price Index (MPI) rebounded 2.2% last week, led by increases in chemical prices and freight rates. It was the first meaningful gain in the index since late October, and came despite another lift in the six-month-strong dollar rally. Sentiment in commodity markets seemed improve slightly, as China appeared to close 2014 on stable footing.
For chemical markets, movements over the past few weeks have been mostly one way, with prices tracking the slide in crude oil. However, ethylene prices firmed last week on stronger feedstocks, with propane prices—still the favored feed—increasing on a strong inventory draw. Regional premiums, buffeted by facility outages, also provided some support.
TMonetary policy was again in the spotlight, with the Bank of Canada unexpectedly cutting interest rates. However, the key event originated from the European Central Bank, which after months of hints finally announced a quantitative easing program to begin in March. Markets clearly hope that policymakers’ commitment to ensuring growth will be enough to offset some of the headwinds outside the United States. On a technical note, beginning with the 10 February release, the MPI will reflect a respecified ferrous term that includes iron ore, busheling, and heavy melt. All history will be revised back to reflect the change.
Pricing and Purchasing – Supply Management