MPI goes even lower as Iran signals rapid production ramp-up
August 6, 2015 - Weekly Pricing Pulse
Last week, the IHS MPI was down again by 1.7%, which takes us to a fresh post-2009 low. Driving the figure lower, we had oil down by 4.1% and chemicals at -2.2%, and lumber also retracted some recent gains to finish down by 5.8%. Other notable declines included rubber (down 4.2%), DRAM (down 1.5%), and nonferrous (down 2.2%). The only increases came from ferrous (up 0.3%) and pulp (up 1.5%).
The index is now at its lowest level since May 2009, and it is down by nearly 10% compared with the 2015 peak seen in April. Interestingly, exchange-traded commodities have fared a bit better in absolute terms, although they are still down 13% versus the May peak.
Data trends are signaling further expected weakness in the index over coming weeks. However, given the bearish news flow, prices could edge even lower than the 1% decline expected next week. This week did start off with more negative news coming out of China relating to purchasing managers' index numbers and another decline of more than 2% on Shanghai markets. Additionally, there were suggestions by Iran that an oil-production ramp-up by 0.5 million barrels per day could be achieved in as little as one week after sanctions are lifted versus the one-year horizon assumed by many in the market.
Global Pricing Summary - Week of 6 August 2015
Key Prices & Demand Drivers