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April 23, 2015 - Weekly Pricing Pulse
The IHS Materials Price Index (MPI) eased 1.5% last week, as falling chemical and lumber prices outweighed a rebound in oil and steel markets.
Iron ore prices broke a nearly two-month losing streak, rising 5.8% for the largest weekly gain since 2012. The move was speculative, driven in part by a small-scale Australian miner’s plans to mothball production and a fall in Chinese inventories. However, ultimately this was a case of "dead cat bounce"—with no fundamental change on the supply side and more disappointing data from its key end market.
The recent trends in data have been worse, mixed, and better in China, the United States, and Eurozone, respectively. China’s latest industrial output figures continue to point to a slowdown, with the dearth of positive news spurring the central bank to sharply ease conditions for banks. US data have also disappointed of late, though a stronger-than-expected inflation report nudged open the door for a (still unlikely) June interest rate hike. European data has ticked up, but as long dated German bund yields head towards record lows and Greek short term yields touch record highs, familiar headwinds are lurking.