Weekly Pricing Pulse: Commodity Pricing Declines on Tariff Woes

The Material Price Index (MPI) by S&P Global Market Intelligence fell by 1% last week, the first decline in four weeks. The decline was mixed, with six of the ten subcomponents falling. The MPI is approximately 3.9% lower than the same week a year ago, indicating a general easing in commodity prices over the past 12 months.

Non-ferrous metals prices dropped by 4.7% last week. This decline comes as markets fear that the new tariffs instituted by the US on April 2 will lead to broad-based demand declines. These declines are expected both due to general economic slowdown and specifically due to a breakdown in trade between the US and its trading partners — notably mainland China.

Copper prices fell from to $9439/metric ton (mt) from $9885/mt the week before, undoing around $400/mt of pricing gains in March. Zinc followed a similar trend, falling from $2913/mt last week to $2758/mt.

Lumber prices were also caught up in market woes around tariffs and fell 6% despite actually being exempt from any new tariffs. Residential housing costs will still, however, increase, due to tariffs on other inputs. This will ultimately decrease lumber demand.

Last week was defined by the US administration’s announcement and implementation of new tariffs on April 2. The announcement set import duties at a minimum of 10% with some as high as 50%.

Markets reacted strongly to the announcement, with the S&P 500 closing 9.1% down on the week — the largest weekly drop since March 2020. These market reactions reflected an increased perceived risk that the US would tumble into recession this year. 

Federal Open Market Committee (FOMC) Chair Jerome Powell publicly stated that this will likely result in “higher inflation and lower growth.” This indicates further uncertainty as the FOMC weighs inflation and growth goals. As the world reacts to the US’s tariffs — largely with tariffs of their own — the risk of weaker global growth intensifies, putting further downward pressure on commodity markets.

—By Gregory Muller

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.