Commodity price volatility recedes as much of Asia rings in the Year of the Sheep
February 27, 2015 - Weekly Pricing Pulse
The IHS Markit Materials Price Index (MPI) ticked up 0.1% last week as a bounce in oil prices offset continued weakness in chemicals. Lumber was the second-worst performer last week (behind chemicals).
January US housing starts came in below expectations despite favorable weather across most of the country, which hurt builder optimism and dampened lumber buying. Outside of energy and chemicals, a calm has settled over markets, in part because of the onset of the Chinese Lunar New Year holiday. Freight rates and rubber prices moved sideways while metals prices fell only marginally.
The policy environment also helped dampen volatility last week. Minutes from the latest Federal Open Market Committee (FOMC) meeting were surprisingly dovish despite continued improvements in the US labor market. With "many" members of the Federal Reserve Board now inclined to keep the federal funds rate at the zero bound for longer, a June rate hike may no longer be in the cards. Globally, the big story last week was the tentative extension of the aid agreement between Greece and its Eurozone creditors. The risk of a Greek exit from the common currency has receded, for now.
Pricing and Purchasing – Supply Management
Global Pricing Summary - Week of 27 February 2015
Key Prices & Demand Drivers