Anti-government protests in Albania pose property damage risks but unlikely to topple government. https://t.co/ltxfJy33E1
Weekly Pricing Pulse: Oil suffers another rout
Commodity prices, as measured by the Materials Price Index (MPI), fell another 1.3% last week, their seventh consecutive decline. The MPI is now at its lowest level since September 2017. Sentiment remained sour with bearish US-housing data, credit stress in China, and weaker oil market fundamentals reinforcing anxiety over the health of the global expansion.
Oil prices dropped 5.0% w/w as seven of the MPI's ten components fell last week. Ocean going freight rates dropped just over 9.0% as worries about cargo volumes and the lagged effect of lower bunker fuel prices filtered into charter costs. Other notable moves included the first w/w decline in the Ferrous Price Index in 11 weeks. Steel making raw materials fell 0.4%, driven by a rout in Chinese steel prices. An exception to the general decline were non-ferrous metals prices, which rose 1.6% on news that copper and zinc inventories were near ten-month lows.
The recent increase in stock market volatility, weakness in corporate bonds, the G-20 meetings this week, a pending Brexit vote in the British Parliament, a new Mexican Administration and a December US interest rate increase all promise to keep commodity markets on edge during December. Moreover, looking into 2019, we do not see much of an improvement. A slow normalization in financial markets and a continuing deceleration in Chinese growth mean that the environment for commodities will remain challenging.
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