IHS materials index posts sixth gain in seven weeks
VANCOUVER (miningweekly.com) – The materials price index (MPI) from Global Insight by IHS Markit has recovered about half the losses it suffered between February and June.
The latest reading of the MPI, an index measuring the weighted average of weekly spot prices for a basket of globally traded manufacturing inputs comprising crude oil, chemicals, nonferrous metals, ferrous metals, paper pulp, lumber, rubber, fibres, tech components and ocean-going freight rates, rose 2.7% last week, its sixth gain in the past seven weeks.
IHS senior economist for pricing and purchasing Ben Orhan on Thursday noted that commodity prices had rebounded strongly since early July. Last week, the strongest gains were in chemical and ferrous markets, with the subindices for each up 4.4% and 4.6%, respectively.
“Activity in China continues to play an outsized role on metal markets, with iron-ore and steel scrap prices gaining on continued demand for ever greater steel production. Chemical prices moved higher last week as paraxylene contract negotiations in the US created volatility, while increasing feedstock prices were transmitted through the supply chain,” the analyst said in a news release sent to Creamer Media’s Mining Weekly Online.
Orhan said the positive tone in commodity markets right now is being driven by a combination of improving economic conditions and a softening US dollar.
“Last week, however, there was no such good news, rekindling worries that markets may be a little too exuberant. In Germany, for instance, industrial production in June fell by 1.1%, pushing annual growth to just 2.5%, the weakest level since March. Similarly, in India, industrial production grew just 0.1% in June, weakening sharply from May,” Orhan said.
Looking ahead to 2018, Orhan warned investors not to extrapolate the recent performance of the commodity markets. “The combination of slower Chinese growth, lower oil prices and tighter financial markets suggests that it will be hard for prices to maintain their current momentum,” he cautioned.
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