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May 1, 2015 - Weekly Pricing Pulse
The IHS Materials Price Index (MPI) registered its strongest gain since July 2009, increasing 5.0% last week, as oil, chemical, and iron ore prices all saw meaningful upward moves.
Iron ore prices ticked up for a second week as markets took a favorable view of BHP Billiton’s decision to delay a planned project that would have supported a ramp-up in Western Australian output. Nevertheless, the first-quarter results confirmed that production boomed against the backdrop of a $20/metric-ton cost floor. Provided last week’s successful debt refinancing by Fortescue Metals Group and the planned startup of the large Roy Hill mine in September, a sustained recovery in prices is still a long way off.
After a run of mixed data in the United States, first-quarter GDP is poised to disappoint this week, although how much of this has been weather-induced and/or influenced by the West Coast port strike will be scrutinized in the FOMC’s April statement. Meanwhile, oil majors will be shedding light on the first full quarter since OPEC’s November decision—and one would expect to see sour earnings. The week will close with the latest set of PMI manufacturing indexes, with China’s PMI particularly anticipated.