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September 17, 2015 - Weekly Pricing Pulse
As expected, commodity prices saw some consolidation last week following the extraordinary volatility seen recently. Our Materials Price Index (MPI) held fairly steady, recording a slight 0.5% decline. Interestingly, while oil and chemicals were both down, metals continue to rally with the nonferrous and ferrous indexes rising 1.5% and 2.7%, respectively.
Early fall will be critical in setting the tone in commodity markets for the rest of 2015. Our current projection shows a correction continuing to play out, with prices reaching a low point in the fourth quarter on seasonal weakness in oil and chemical prices.
This week's Federal Reserve meeting, however, could give prices space to move upwards if the Fed leaves interest rates alone. Exchange-rate movements (i.e., a weaker dollar) and the implicit stimulus a delay in raising interest rates would be are supportive of the entire complex. Shanghai markets did get pummeled again early this week, though, again confirming the bad news coming out of China. Ultimately, price direction over the rest of the year will be dictated by how much of this emerging-market damage has already been priced in, versus the slow improvement being seen in Europe and the United States.