Thursday’s figure of nearly 3.3 million set a grim record. “A large part of the economy just collapsed,” said Ben H… https://t.co/aNB36p7Y2A
Weekly Pricing Pulse: Trade uncertainty piles on
Another week of negative trade news weighed on commodity prices with weaker sentiment sending prices for oil, chemicals, and nonferrous metals lower. Our broader composite Material Price Index (MPI) fell 1.1%, its fourth decline in the past five weeks. The MPI has stayed roughly flat since mid-February.
Oil prices were the biggest mover in the MPI last week. Brent crude slid from $68/barrel on Monday to $62/barrel on Friday, May 31. Despite OPEC restraining production and reduced exports from Iran and Venezuela, the market remains well supplied with demand proving to be tepid. Trade policy continues to weigh on demand. Nonferrous metals prices fell 0.5%, the ninth decline in the last ten weeks, with copper, a bellwether for the base metals complex, falling to its lowest level since July 2017. Chemicals prices slid 2.9% on falling input costs and soft demand. Iron ore continues to push against the general trend in commodity markets, rising to almost $99/metric ton last week, its highest price since June 2014.
While the breakdown in US-China negotiations has been roiling markets for the past month, it was President Trump's threat to place new tariffs on Mexican imports and Prime Minister May's resignation that were the catalysts for last week's retreat in commodity, equity and bond markets. President Trump's threat to invoke the International Emergency Economic Powers Act to impose tariffs on Mexican imports was particularly destabilizing because only hours before Mexican President Obrador had announced that he would submit the new US-Mexico-Canada trade agreement (the USMCA) to the Mexican Senate for ratification.
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