BLOG — Apr 16, 2025
Weekly Pricing Pulse: Tariff-Driven Demand Headwinds Spark Broad Retreat in Global Materials Prices
Market sentiment will continue to be influenced by evolving trade policies. Tariffs primarily pose upside risks to US prices, as industrial materials prices outside the US will face limited downward pressure due to restricted access to US markets, with traded goods increasingly redirected elsewhere. Most components of the Material Price Index (MPI) by S&P Global Market Intelligence are global benchmarks and not US prices, so are not significantly impacted by US import tariffs.
The MPI fell by 5.3% last week, the largest weekly decline since November 2022. The decline was broad, with nine out of ten subcomponents decreasing. The MPI is approximately 9.1% lower than the same week a year ago, indicating a general easing in commodity prices over the past 12 months.
Natural rubber prices were a significant contributor to the decline in the aggregate MPI, with the sub-index decreasing by 10.9%. Natural rubber prices on the Singapore Exchange fell to 199 cents per kilogram last week, the lowest level since March 2024. Traders turned bearish due to concerns over rubber demand, driven by fears of a global economic slowdown stemming from the new US tariff policy and ongoing trade escalations between the US and mainland China.
Energy prices also exhibited weakness last week, with the sub-index declining by 6.2%. Brent Crude Oil, the international benchmark, fell to $62.90 per barrel last week, the lowest level since July 2021. This decline was driven by a rise in crude oil supply, as OPEC+ announced an increase in production by 411,000 barrels per day in May, significantly exceeding planned amounts. This unexpected boost in production, combined with global economic slowdown fears, further pressured oil prices downward.
Commodity markets continued their bearish trend last week following the changes in global trade policy. These changes include a temporary 90-day pause on US President Donald Trump's reciprocal tariffs, yet a baseline 10% tariff on commodities from outside North America (excluding Canada and Mexico) remains in effect.
Escalating tariff rates between the US and mainland China have increased market uncertainty, affecting investor sentiment and raising concerns about inflation and economic growth. Last week’s data releases indicated that US inflation unexpectedly moderated in March, with core consumer price inflation rising by 0.1% and the 12-month change in the core CPI declining by 0.3 percentage points to 2.8%, the lowest level since April 2021.
Concerns about tariff-induced price increases persist, and upcoming inflation reports will provide insights into their impact on consumer prices. Next week’s data releases include March US retail sales, along with updates on US industrial production and housing starts.
—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.
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