Down 2.1% last week, IHS Materials Price Index tracks lower for third week
VANCOUVER (miningweekly.com) – Lacklustre Chinese manufacturing data, coupled with moves by regulators to crack down on risky investments, is fuelling concern that Chinese demand growth is set to decelerate and that it had pushed down commodity prices over the last three weeks, market intelligence firm IHS Markit said in a statement Thursday.
Economist Cole Hassay pointed out that the IHS Materials Price Index (MPI) dropped 2.1% last week, as eight of the ten sub-indices fell. The MPI has now declined 11.2% from its mid-February high.
Freight rates experienced the sharpest decline last week, falling 6.1% owing to declining fuel prices and jitters about Chinese trade. Oil fell by 3%, its third consecutive decline as concerns of oversupply in global markets persisted.
Meanwhile, the ferrous metals subindex dropped 4.5% on plunging iron-ore prices. Record iron-ore port stocks, Chinese steel export markets being closed off by trade actions, and concern about softening real estate markets have combined to pop the iron-ore bubble. Fibre prices came in as the strongest sector last week, rising 0.4% only.
Hassay said the April Purchasing Manager Index (PMI) reports and fresh US employment data highlighted the weak data last week.
“April's US employment report was solid with 211 000 jobs added. The PMI reports, though, did show some softening, with the April global manufacturing composite index inching back to 52.8 from 53 in March.
“Masked within this slight decline; however, was the retreat in the Caixin Chinese manufacturing index, which moved down to 50.3, close to the break-even 50 mark. Doubts about Chinese manufacturing activity coupled with ongoing efforts to restrain credit growth are raising concerns about commodity demand in the second half of the year and undermining prices,” Hassay stated.
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