VANCOUVER (miningweekly.com) – The materials price index (MPI) from Global Insight by IHS Markit gained 0.5% over the past week, building on a 1.6% gain the previous week.
The main drivers last week were technology, with IHS's computer chip-based DRAM subindex climbing a significant 5.2%, while oil and lumber were up 1.3% and 1.8%, respectively.
IHS Markit senior economist for pricing and purchasing Ben Orhan advised that DRAM prices have seen strong gains over the last month, as supply constraints continue to push up prices. DRAM customers that did not secure product via contracts have been left scrambling to meet demand in the spot market and are driving up prices. Oil prices continued higher last week, holding above $60/bbl on expectations that Opec-led production cuts would be extended beyond March 2018.
Economic data releases last week were generally supportive of higher commodity prices. In the US, third-quarter gross domestic product growth came in at 3% – stronger than expected.
The IHS Markit composite PMI also showed strength, hitting 55.7 with growth in manufacturing centred on new orders and employment gains. In the Eurozone, the new EU Commission Consumer Confidence Survey moved higher, reaching -1, the highest level since the end of the Great Recession.
Chinese data also continue to be good, with recent releases showing industrial profits up 27.7% on the year in September.
"The one negative for the week was the US dollar, which rose against a basket of currencies, including the euro and yuan. Watch interest rate differentials between the US and Europe through the end of the year – they may widen further, lending further support to the US dollar and thereby undercutting some of the momentum in commodity markets as the year closes," Orhan stated.