Markets experience further uptick as oil prices drive MPI higher
June 1, 2017 - Weekly Pricing Pulse
Last week the IHS Materials Price Index (MPI) gained 0.6%, a second successive weekly increase and the first consecutive rise since February. Once more, strong gains in oil markets early in the week propelled the index higher, with the sub-component gaining 2.2%. Additionally, rubber prices increased 3.1% to hit their highest level in a month.
Oil prices rose last week as markets digested the extension of OPEC's production agreement. However, prices began to slip late in the week as the initial positivity this deal provided failed to hold. In rubber markets, prices picked up following a disappointing two months in which prices had slumped on global oversupply worries. Indeed, markets welcomed the news that the Association of Natural Rubber Producing Countries, which accounts for around 90% of global natural rubber production, is to focus on price stability.
The macro environment last week was also supportive of commodity price gains, with the US dollar continuing to slip. In Germany, an unrevised first full reading of first-quarter GDP growth came in at 0.6%, a decent rate for the Eurozone's largest economy. In the United States, there was a strong flash reading for the composite purchasing managers' index (PMI), as a strong pickup in services pushed the measure higher to 53.9. Despite these solid announcements last week, there remain several challenges for commodity markets over the rest of the year. Higher US interest rates, questions about additional US infrastructure funding, and, most importantly, slowing Chinese growth point to continued volatility in the months ahead.
IHS Materials Price Index
Industrial Materials: Prices
Key Prices & Demand Drivers