VANCOUVER (miningweekly.com) – The materials price index (MPI) from Global Insight by IHS Markit gained a strong 1.3% last week, hitting its highest level since late 2014, the company reported on Thursday.
Three categories led gains, including ferrous metals, rubber and freight, all of which posted large jumps, according to IHS.
“Steel markets have been in a strong uptrend over the last two weeks, with unseasonably warm weather in China helping to prolong the building season. Steady demand has pressured already tight markets caused by government-mandated cuts in production to meet pollution targets,” noted senior economist for pricing and purchasing Ben Orhan in a news release.
Rubber prices have also been moving higher recently in reaction to several factors, including a pledge by rubber producers to cut exports, a warehouse fire in Shanghai that damaged a significant block of inventory, and the Thai government’s plan to increase buffer stock purchases in 2018.
Orhan added that recent macroeconomic data has added to the buoyant mood in commodity markets.
“US employment growth for November came in above expectations, highlighting yet again solid labour market conditions leading into 2018. In the Eurozone, November’s manufacturing PMI reading moved up 1.5 points, to 60, with Germany hitting 62.5, the highest level since 2011.
“In Asia, the second reading of third-quarter Japanese GDP came in at 0.6%, a doubling from the prior period, driven by stronger private non-residential investment. Despite these positive demand-side drivers, we expect the New Year to bring slower growth in China, a tightening in financial markets and slightly lower oil prices, a combination that will cap commodity prices and stem the build-up of pressure in supply chains,” Orhan stated.