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July 23, 2015 - Weekly Pricing Pulse
The IHS Materials Price Index (MPI) increases 0.3% last week, breaking a string of recent declines. Even with last week's gain, however, the MPI remains a shade below its previous 2015 low back in April. Commodity prices are now collectively at levels last seen in 2009.
The index was pushed up by a 1.8% boost in steel-making materials, a 1.7% gain in nonferrous metals prices, and a relatively large 5.3% increase in our oceangoing freight index. There were fairly significant falls in fiber (down 2.9%), DRAMS (down 2%), and oil prices (down 0.8%).
The commodity complex has taken on a bearish tone, with industrial materials, precious metals prices, and oil all experiencing headwinds. Although markets are moving on from Greece, the Chinese economy remains a source of risk. The new worry emerging concerns financial rates, with markets now beginning to price in the probability of a US rate hike after June's US consumer price index report. Precious metals (not part of the MPI) have taken the brunt of this shift in focus, with gold falling nearly 5% last week. West Texas Intermediate (WTI) crude oil dipping below $50/barrel this week is a sign of further weakness ahead for the MPI.