The HWWI raw material price index rose again in February
- HWWI total index rose by 3.0% (US dollar basis).
- Crude oil prices rose by 7.4%.
- Increase in the index for industrial raw materials.
(Hamburg) In February, the HWWI commodity price index rose by an average of 3.0% per month (in euros: +3.6%) compared with the previous month. The HWWI Commodity Price Index was at 116.7 points in February 2019 (in euro: 114.0 points) and thus 4.0% (in euro: +4.4%) lower (in euro: higher) than in February 2018. Once again, the index for industrial raw materials showed the largest increase. Prices for industrial raw materials rose significantly in February by 7.9% (in euros: +8.5%). The index excluding energy rose by 4.8% (in euros: +5.4%). The subindex rose to 111.7 points (in Euro: 109.2 points). The index for energy raw materials, which only recorded a moderate increase in the previous month, rose more significantly in February with 2.7% (in euros: +3.3%). As in January, crude oil prices rose in February, while the prices of the other two energy commodities, natural gas and coal, fell. Crude oil rose in the monthly average around 7,4% (in euro: +8,0%). This means that the trend reversal on the crude oil market is continuing.
Index for energy raw materials: +2.7% (in Euro: +3.3%)
In February, the monthly average price of crude oil rose by 7.4% (in euros: +8.0%) to 61.41 US dollars (in euros: 54.11) per barrel compared with the previous month. The hope for a settlement of the current trade conflict between the USA and China, the supply cuts initiated by OPEC and the sanctions imposed by the USA on Iran and Venezuela led to an increase in crude oil prices in February. All three reference grades in the index rose. The strongest increase was in the price of Middle Eastern crude oil. The Dubai variety rose in price by 8.4% (in euros: + 9.0%). Saudi Arabia reduced crude oil production by 300,000 barrels per day compared with January and announced further reductions in crude oil production. European Brent crude oil increased in price by 7.1% (in euros: +7.7%). The weakest increase was in the price of West Texas Intermediate (WTI) crude oil from the United States, which showed the strongest increase in the previous month. WTI rose by 6.5% (+7.1% in euro terms). WTI’s price was also significantly lower than in February 2018.
In February, natural gas prices fell by an average of 16.2% (in euros: -15.7%) and thus more sharply than in the previous month. Well-filled gas reserves and mild weather in the first weeks of the year caused the average price of natural gas to fall continuously. The price of European natural gas fell much more sharply in February than in January. A high supply of LNG from North America, which could not be sold on the Asian market due to excessive transport costs, caused prices to fall significantly. European natural gas fell in price by 18.3% (in euros: -17.9%). The price of US natural gas fell by 14.1% (in euros: -13.6%) and thus less sharply than in the previous month. High production rates and low demand continue to weigh on price development in February, which was halted at the end of the month as colder weather is expected in the first half of March. Coal prices continued to fall in February, again more strongly than in the previous two months. The monthly average price of coal fell by 4.3% (in euros: -3.7%), with the price of South African coal falling in particular. Overall, the index for energy raw materials rose by 2.7% (in euro: +3.3%) to 117.5 points (in euro: 114.8 points) and thus more significantly than in the previous month. Once again, the rise in crude oil prices compensated for the price declines of the other two fossil fuels.
Index for industrial raw materials: +7.9% (in Euro: +8.5%)
The index for industrial raw materials is subdivided into the index for agricultural raw materials, the index for non-ferrous metals and the index for iron ore and steel scrap. In February, the index for Agricultural Commodities rose by 4.9% (in euro: +5.5%) on a monthly average. The average price of sawn timber rose particularly sharply. The US government’s shutdown hampered the forecast for the forthcoming construction season in the USA and led, among other things, to great uncertainty with regard to well-founded expectations regarding the supply and demand of sawn timber. In addition, poor weather conditions caused transport problems. Sawn timber became 21.2% more expensive (in euros: +21.9%). The price of hides and skins fell as sharply as in the previous month. In February it fell by 8.3% (in euro: -7.8%).
The index for base metals rose sharply in February, after losing ground in recent months. On a monthly average, the prices of all base metals included in the index rose. The smallest price increase for aluminium was observed. The price of aluminium rose by 0.7% (+1.3% in euro terms). Lead prices rose by 3.4% (in euro: +4.0%). The price increase for tin was 3.8% (in euro: +4.4%). Particularly strong inflation rates were observed on a monthly average for zinc, copper and nickel. The zinc price rose by 5.6% (in euros: +6.2%). Low inventory levels and environmental regulations, which limit the capacities of the refineries in China, are reasons for the price increase of zinc. The price increase for copper was 5.8% (in Euro: 6.4%). Nickel recorded the largest price increase, rising significantly by 10.4% (11.1% in euros). Copper and nickel are substantial raw materials in electric vehicles. The production of electric cars, especially batteries, requires a multiple use of copper and nickel compared to traditional drive technologies in automobiles. Rising demand for electric cars, especially in China, and low inventories caused copper and nickel prices to rise. In addition, price developments are influenced by progress in resolving or intensifying the current trade conflict between the US and China. Most recently, the USA did not raise import tariffs from 10% to 25% at the beginning of March, as an agreement with China is currently regarded as promising. The monthly average index of base metals rose by 3.8% (in euros: +4.4%). Prices for iron ore and steel scrap have also risen.
Iron ore became more expensive as a result of the after-effects of the Brazilian mining accident in Brazil. The price of iron ore rose by 18.5% (in euro: +19.2%). Fears of a supply bottleneck caused iron ore prices to rise further during February. However, reports of relatively high inventory levels in China caused prices to fall moderately towards the end of the month. The index for iron ore and steel scrap rose by an average of 15.9% per month (+16.5% in euro terms). Overall, the index for industrial raw materials rose significantly by 7.9% (in euros: +8.5%) to 126.8 points (in euros: 124.0 points).
Food & Beverages index: -1.0% (in euro: -0.4%)
On a monthly average, food and stimulant prices have fallen slightly. The price of coconut oil fell particularly sharply because fears of a decline in demand clouded expectations. The average monthly price of coconut oil fell by 8.0% (in euros: -7.5%). Poor weather conditions for sowing and growth, however, are lowering the prospects for future crop yields, so that the fall in prices could be temporary. The price of wheat continued to fall. The mild winter in Europe is raising expectations for good harvests in Germany and Russia. The trade dispute between the USA and China also reduced demand. The wheat price fell by 5.4% (in euros: -4.9%). After the price of palm oil had risen significantly last month, only a price increase of 1.1% (in euros: +1.7%) was observed in February. Coffee and cocoa prices fell slightly on a monthly average. Coffee prices fell by 0.8% (in euros: -0.2%). The price of cocoa fell very moderately by -0.3% (in euros: +0.2%). Overall, the monthly average index for food and stimulants fell by 1.0% (in euros: -0.4%) to 89.8 points (in euros: 87.8 points).