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The MPI continues on an upward trajectory

December 9, 2016 - Weekly Pricing Pulse

There was evidence of further strength across all commodities last week, with only the chemicals sub-index slipping in another strong upward week for the MPI.

The IHS Materials Price Index (MPI) rose another 1.7% this past week, furthering the strong gains from the previous two weeks. Key to last week's surge were freight, lumber, and oil, which gained 4.2%, 4.5%, and 3.5%, respectively.

Following on from last week's bullish mood, all underlying components, bar chemicals, increased. Oil prices rose strongly as OPEC's Vienna meeting saw an agreement on supply reached. Lumber markets experienced large gains last week—the result of anxiety about the potential re-imposition of tariffs and quotas on Canadian imports into the United States. Freight rates have seen large increases due to a surge in bookings as buyers attempt to lock in shipments as hedges against further increases in coal and iron ore prices.

Last week saw several positive economic announcements. The EU measure of economic sentiment was marginally improved in November, at 106.5, up 0.1 point on October, the highest level since last December, and a third consecutive monthly gain. India released third-quarter GDP, which increased 7.3% year on year, up from a gain of 7.1% in the prior quarter. In the United States, November motor vehicle sales slipped slightly from October, but at 17.9 million it was still the second-strongest month of the year. Commodity markets continue to carry significant momentum into December and may therefore push higher over the next week or two. This said, prices are beginning to look exposed given the appreciation in the dollar over the past month. Dollar strength with a looming US interest rate hike would seem to make commodity markets ripe for year-end profit-taking.

Global Sourcing Survey

We invite you to participate in our fifth annual Global Sourcing Survey.

Supply chains are fragile and susceptible. As a procurement professional, you know it is vital for global executives to have visibility into their supply chains and to proactively measure and react to risk. In this annual survey we aim to take the pulse of the global supply chain in the following areas:

  • Identify how prepared businesses are for a disruption
  • Determine how companies’ sourcing strategies will change in 2017
  • Identify companies’ strategies for outsourcing to China or other locations

The survey will take approximately 15 minutes to complete. Please be assured that your individual responses will remain confidential and that results will only be published in aggregate form. All survey participants will be notified of the resulting benchmark report when it is published.

Please contact Paul Robinson with any questions

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IHS Materials Price Index

Industrial Materials: Prices

Industrial Materials: Prices

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