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April 1, 2016 - Weekly Pricing Pulse
The IHS Materials Price Index increases for the sixth straight week.
Commodity prices continued their impressive rebound last week, with our IHS Materials Price Index (MPI) rising another 2.4%. The MPI has now risen for six consecutive weeks and for eight of the past nine weeks. Since mid-January, the MPI is now up by more than 22%. Last week’s increase was driven by strong increases in oil, chemicals, and rubber, the latter two in a lagged response to earlier increases in energy prices. Pulp and DRAMs fell, while fiber prices were flat. Nonferrous process rose only 0.2%, signaling a slowdown in the rally in metal prices.
Gains in crude oil continue to garner most of the attention, as the market is becoming more optimistic about production cuts. US production has proved more resilient than expected. But comments by several OPEC producers about capping production and, more importantly, the scheduled 17 April meeting in Doha of major oil producers to discuss a freeze has been acting to drive prices higher.
The next seven days will supply a wealth of data and provide clues about how much real support is behind this rally. Federal Reserve chairperson Janet Yellen’s speech this week will help to clarify the speed of future US interest rate increases, while Friday will bring both the March US employment report and the latest purchasing manager index (PMI) reports. Commodity markets are looking a bit exposed after recent price gains. Disappointing data could finally break the string of consecutive gains in the MPI.