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December 30, 2016 - Weekly Pricing Pulse
The IHS Materials Price Index (MPI) moved up once again this week, increasing 0.4%. This small bump around the relatively quiet holiday period was mainly driven by chemicals. Several commodity areas saw price declines, in contrast to the near-uniform increases of the past month.
Rubber prices, which posted significant increases over the past month, fell 2.6%. Ferrous prices remained unchanged while nonferrous metal prices dropped 4.1%. Chemical prices rose 3.8% on increases tied to facilities not coming online completely after planned outages and adjustments to oil price moves in the wake of OPEC’s November production agreement.
Last week saw more positive macroeconomic data. In the United States, third-quarter real GDP growth was revised up from 3.2% to 3.5% (annualized). And despite a negative headline figure, the US durable goods report also signaled a better demand environment, with orders for nondefense capital goods (excluding aircraft) increasing 0.9%. In France, GDP grew 0.2% (q/q), a positive move after a contraction in the second quarter. In the United Kingdom, GDP growth was stable at 0.6%. Growth was driven by services. As we have been noting, commodity prices look rich given US dollar strength. Wavering prices in several sectors last week may be the first signs of the correction we anticipate over the holiday season.
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