Weekly Pricing Pulse: Commodity Prices Stabilize on Contrasting Fortunes in Metal and Lumber Markets

• The Material Price Index (MPI) by S&P Global Market Intelligence increased slightly by 0.1% last week, reversing the previous week’s fall.
• The increase was broad, with seven of the ten subcomponents climbing.
• Nonferrous metals prices returned to growth last week with the sub-index climbing 0.7%, following two consecutive declines. 
• Markets focused on trade developments last week after US President Donald Trump extended a tariff truce with Mainland China for another 90 days.

Markets remained focused on trade developments last week after US President Donald Trump extended a tariff truce with mainland China for another 90 days.

The US released both CPI and PPI data last week, which posted increases of 0.2% M-o-M and 0.9% M-o-M respectively in July. On an annual basis, CPI was up by 2.7% while PPI rose by 3.3%. Demand for commodities remains subdued, however, and this was evident in Mainland China factory output growth which slowed to 5.7% in July, the lowest in eight months, while retail sales growth continues to decelerate for the second consecutive month to 3.7%.

This week, key economic releases include Germany and South Korea PPI data, and flash PMI data from several countries, including the US, Eurozone and others.

The Material Price Index (MPI) by S&P Global Market Intelligence increased slightly by 0.1% last week, reversing the previous week’s fall. The increase was broad, with seven of the ten subcomponents climbing. The MPI remains approximately 5.0% lower than it was the same week a year ago, indicating a general easing in commodity prices over the past twelve months.

Nonferrous metals prices returned to growth last week with the sub-index climbing 0.7%, following two consecutive declines. The zinc London Metal Exchange (LME) price rose the highest among the nonferrous subgroup, up by 1.6%, averaging $2821.10. This increase was due to the ongoing depletion of LME zinc stocks, which have fallen to a two-year low, causing concerns over availability. Despite a significant supply surplus projected in the market, the tightening inventory has led to heightened speculation and support for zinc prices.

In contrast to the strength recorded in metals markets, lumber markets experienced a significant price decline last week. Prices on the Chicago Mercantile Exchange (CME) dropped by 7.9%, the largest weekly decline in four months. This decline was driven by a lack of demand. The vast majority of US buyers have stockpiled lumber, anticipating higher import tariffs and, with domestic construction demand weak, prices were down sharply last week.

—Badrul Syahmi

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.