VANCOUVER (miningweekly.com) – The materials price index (MPI) from Global Insight by IHS Markit fell 0.7% last week, driven by weakness in the oil and chemicals sectors, the firm announced on Thursday.
It was the MPI’s first decline since the middle of June, as weakness in oil, down 1.5%, and chemicals, down 3.9%, pulled the overall MPI lower. Lumber and pulp prices were rare bright spots for sellers, up 7.1% and 2.1%, respectively, IHS data showed.
“Oil price changes have been a key driver of the MPI over the last few months, with gains and losses in the headline index reflecting the direction of oil markets every month back to April. Lumber prices climbed spectacularly last week as wildfires in Canada forced some sawmills to halt operations at a time when prices were already being pressured higher by softwood duties on exports to the US,” IHS economist Cole Hassay stated.
“Our chemical index also slipped 3.9% last week, as US ethylene prices continued to drop — hitting their lowest levels since February 2016, as the US ethylene market remains oversupplied,” he added.
IHS noted that despite the index falling last week, the period also saw several positive macroeconomic readings, prompting the analyst not to think the market has necessarily turned negative.
In the US, the June industrial production measure gained 0.4%, following a flat reading the previous month, with mining the big driver of gains, up 1.6%.
In the Eurozone, the same measure was up 1.3% for May, a third consecutive monthly gain; capital goods were the force behind the impressive headline figure. However, most eyes were on the upcoming Chinese gross domestic product release, with the coming week's price moves likely to have been heavily influenced by the outcome here, Hassay said.
The MPI measures a 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. It seeks to capture the commodity input costs for a diversified global manufacturer.