November's plunge sends exchange-traded commodities to 2009 levels

November 27, 2014 - Weekly Pricing Pulse

The IHS Markit Materials Price Index (MPI) softened 1.1% last week, dragged down by declines in freight rates, oil, and rubber prices.

Natural rubber markets were undercut by weakness in synthetic rubber prices, which were hit by falling feedstock costs. Rubber markets fell to 2009 levels in September on overcapacity and tepid demand, but had since staged a meager rebound in October. Prices are down 34% year over year and are unlikely to see meaningful gains in the weeks ahead.

Although additional stimulus has created bouts of optimism over the past few months, soft incoming data have consistently grounded commodities. In a week where Japan unexpectedly entered recession and disappointing "flash" purchasing managers' index reports were released, markets were treated to a late boost when the People's Bank of China cut interest rates and the European Central Bank again hinted at balance-sheet expansion. However, Friday's lift was not enough to salvage a weekly gain for the MPI, as weak aggregate demand continued to restrain prices.

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