Weekly Pricing Pulse: Commodities Edge Downwards After Two Weeks of Flat Prices

• The Material Price Index (MPI) by S&P Global Market Intelligence declined by 0.9% last week.
• The decline was mixed with four of the ten subcomponents falling.
• Commodity market sentiment continues to be influenced by the recent trade policy developments.

Focus on trade policy

Markets remained focused on global trade policy developments last week, particularly the US decision to double tariffs on steel and aluminum imports from all trading partners outside the UK to 50%, while maintaining a 25% tariff on UK steel and aluminum imports.

US employment data revealed an increase of 139,000 nonfarm payroll jobs in May, with the unemployment rate unchanged at 4.2%, suggesting that the job market remains in a status quo mode. Both the escalation of duties and the May employment report contributed to mixed market sentiment.

In Europe, the European Central Bank (ECB) lowered its key interest rates by 25 basis points, bringing the deposit facility rate to 2.0%, the lowest level since January 2023. The central bank highlighted that its easing cycle is almost completed, but S&P Global Market Intelligence still expects one more cut during the second half of the year.

Overall, commodity market sentiment continues to be influenced by the recent trade policy developments. This week, key data releases, including the consumer price index (CPI) and the producer price index (PPI) for the US and mainland China, will give an indication of how trade tensions are impacting the real economy.

Material Price Index moves

The Material Price Index (MPI) by S&P Global Market Intelligence declined by 0.9% last week, following a marginal decline the week before. The decline was mixed with four of the ten subcomponents falling.

The MPI is approximately 11.0% lower than it was the same week a year ago, indicating a general easing in commodity prices over the past 12 months.

Natural rubber prices were the major downward mover last week, with the sub-index declining by 4.9%. Prices on the Singapore Exchange fell to 210.1 cents per kilogram, down from 221.0 cents the previous week. This decrease is attributed to the return of full production levels from key producing countries in the Northern Hemisphere following the end of the wintering season, leading to increased supply and downward pressure on prices.

In contrast, semiconductor memory prices, as indicated by the DRAM price sub-index, rose by 10.1%, marking the largest weekly increase since March 2021. This surge is driven by expectations that major memory manufacturers will reduce or halt production of benchmark products, particularly DDR4 types, by the end of the year. Concerns about tightening supply of these products, along with buyers ramping up inventories in anticipation of tariff uncertainties, have further contributed to the upward pressure on prices.

—By Yan Hoong

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.