Commodity, rebound of the Prometeia index in March (+1%)

April 20th 2016

stefano.sparacca@prometeia.com

Global supply is gradually adapting to the weakness of consumption on various markets. Machinery industry index increased by 2%

Manufacturing enterprises. Rebound of the prices of industrial commodities in March: the Prometeia index has shown a 1% growth (m/m), affected by the ongoing process on key international markets of gradual adjustment of the production capacity to the subdued dynamism of global, and especially Chinese, consumption. The rise in the Brent price is responsible for the recovery, returned above 38 Us$/b. Rising supplying costs for all sectors, excepting the food industry (-1%): the most incisive price increases have specifically concerned the machinery and fashion industries (+2% in both cases). The increase in costs for the raw materials of European companies has followed the evolution of global prices, with a dollar/EUR exchange rate stable at approximately 1.11.

The rise on the the ferrous and non-ferrous metal industry markets have sustained an increase by 2% of the machinery industry index. After the price increases in February, the prices of flat steel have continued to be affected by tensions in terms of costs: iron ore prices have indeed increased by more than 20% compared to February, as a result of mostly speculative transactions prompted by the expectation of a new stimulus plan to boost the economy by the Chinese government. In our view, such hypothesis is groundless. Instead, the increase by 7.8% of copper metal prices stems from the streamlining of the offer on a global scale, as well as the significant purchasing plan of the Chinese Strategic Reserves Bureau in an attempt to oppose depreciation. The price of plastic materials is also rising, mainly driven by the price increases upstream of the chemical supply chain, and particularly of Virgin Nafta (+19.5%). Electricity costs remain unvaried.

 
Prometeia indices of the prices in EUR of the commodities
Average 2010=100, monthly data
Var. % (mar16/feb16) of the commodities for machinery industry
Prices in EUR
 
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