VANCOUVER (miningweekly.com) – The Materials Price Index (MPI) from Global Insight by IHS Markit has risen for the tenth consecutive week, the research and consultancy group announced on Thursday.
The index added a strong 1.8%, adding to a 15.1% rise since early October, when the current rally started.
IHS Markit pointed out that, as has been the case since mid-December, gains last week were once more broad-based, with seven of the ten subcomponents rising. Ferrous metals led the rise, climbing 3.6%, while oil prices had another strong week, moving up 2.2%.
"Weather related disruptions in Australia put pressure on iron-ore prices, while continued restrictions on the Chinese industry helped lift ore, steel scrap and finished steel prices. In crude oil markets, US inventories declined for the eighth consecutive week as imports decreased and refinery runs remained elevated, pushing up prices," IHS Markit economist Cole Hassay commented.
Data released by the US Commodities Futures Trading Commission last week also indicated a record number of long positions in oil futures markets, highlighting a strong investor play in the market that is adding upward momentum to prices.
Data releases continue to reinforce the buoyant mood in markets, Hassay advised.
In the US, Bloomberg's Consumer Confidence Index recorded a 17-year high. In India, industrial production rose by a sharp 8.4% year-on-year in November, driven primarily by increased activity in the manufacturing sector. Industrial production in the Eurozone was also strong, growing by 3.2% year-on-year in a broad-based expansion.
"Finally, US dollar weakness is acting to raise prices for all US-dollar dominated commodities, much like a rising tide lifts all boats. While commodity markets are exhibiting real strength to start the year, our caution is that conditions now seem almost too good.
"We do see several potential headwinds looming in the form of slower Chinese growth, tighter financial markets and flat or falling oil prices. For the moment, however, commodity markets are providing support for a bullish narrative to the New Year," Hassay stated.