The Materials Price Index (MPI) fell 0.3% last week, putting the index near its starting point for 2018. Price declines were narrow, however, with only three sub-indexes retreating: chemicals, nonferrous metals, and freight rates. All fell by more than 1.5%.

Disappointing Chinese data and climbing aluminium and copper inventories pushed the nonferrous metals price index down 1.7% last week. Aluminium markets were also roiled by the Trump Administration’s announcement of potential tariffs on U.S. imports. Meanwhile, chemical markets remain well supplied, pushing down prices. Ethylene prices fell 1.9% as supply conditions remained stable and two crackers came back online, while propylene prices fell 3.3% due to weak demand and ample inventories.A wild news week contributed to market turbulence last week. Federal Reserve Chairman Powell’s comments during testimony on Capitol Hill reinforce our forecast of four interest rate hikes this year. He stressed that the FOMC will continue to try to strike a balance between avoiding overheating and encouraging a rise of inflation to 2% on a sustained basis. Attention shifted from Capitol Hill to the White House on Thursday when President Trump indicated his intention to impose steep tariffs on steel and aluminium imports. Finally, in China, more signs of tightening credit -- reports surfaced of government assistance being given to the HNA Group amid growing financial troubles, this one week after the government seized the Anbang Insurance Group. Expect more volatility in markets this spring as US interest rates climb and it becomes even clearer that Chinese growth is slowing. The final factor checking a continued rally in commodity prices will be energy markets, where stronger production promises to tip markets into surplus and send prices lower in the second half of the year.