MPI Down Ahead of OPEC Meeting and Soft Chinese Data
June 4, 2015 - Weekly Pricing Pulse
The IHS MPI fell 3% last week, undoing much of the index’s gains since late April. Among the commodities dragging things down were oil, chemicals, nonferrous metals, pulp and fiber.
The 2.2% retreat in the oil index comes just ahead of Friday’s OPEC meeting. Recent volatility in oil markets, coupled with the OPEC meeting this week, would suggest some caution in interpreting lower energy prices, even though fundamentals suggest a correction is due. Base metal prices have also been sliding, largely because of persistent softness in Chinese industrial activity. Copper prices have seen all of May’s early strength evaporate, while aluminum prices have dropped to their lowest level in more than a year.
The Brent price should continue to hover around $65/barrel prior to the OPEC meeting, around its same level since mid-April. While OPEC’s policy U-turn contributed to the price collapse late last year, this change has already been priced in, so we expect no surprises. A firmer dollar may also weigh down commodity prices over coming weeks, especially given what are likely to be tense negotiations with Greece over its debt payments.
Global Pricing Summary - Week of 4 June 2015
Key Prices & Demand Drivers