HWWI Commodity Price Index again fell by double digits in February
- Index for energy commodities declines by 12.3 % (US dollar basis)
- Index for food, beverages and tobacco up 2.5
- Index for industrial raw materials falls by 0.3
(Hamburg, March 3, 2023) The HWWI commodity price index again fell by double digits in February. It slipped by 10.2%, having already fallen by 19.7% in January, and was thus 20.7% lower than in February 2022.
As in January, falling prices for energy commodities were the main reason for the drop in the overall index. The index for energy raw materials fell by 12.3%. The index for industrial raw materials fell by only 0.3%, while the index for food, beverages and tobacco rose slightly (+2.5%), as in the previous month.
Index for energy commodities: Prices for natural gas and coal continue to fall significantly, crude oil subindex also declines slightly
The subindex for natural gas fell by 19.7% in February and was 37.1% lower than in February 2022.
Savings by households and industry, filled storage facilities and higher production, including of LNG, were the reasons for the further decline in prices. However, this should not yet be interpreted as a sign of lasting easing. If demand from China and other Asian countries picks up again, prices are likely to rise again.
The sub-index for coal fell more sharply in February than in the previous month, by 35.6%. It was now also 10.2% lower than a year earlier. Contributing to the falling prices is the fact that there are currently no longer any concerns about security of supply in the energy market and that winter in the northern hemisphere is drawing to a close. The situation in China is also an important factor on the coal market: During a slow recovery of the Chinese economy, import demand is weak and at the same time China has increased its own coal production to a new record. Both developments are having a dampening effect on prices.
Following a slight increase in January, the downward trend observed in previous months for the crude oil subindex continued in February. The subindex fell by 0.7% and was thus 12.8% lower than in February 2022.
Overall, the index for energy commodities fell by 12.3% (euro basis: -11.8%) in January to 230 points (euro basis: 245.8 points).
Little change in industrial raw materials; all prices well below year-earlier levels
As in the previous month, there were no significant changes in the index for industrial raw materials in February. The comparatively relaxed situation stabilized further. The subindex for agricultural raw materials rose by 4.7% and was driven by the price of lumber, which increased by 23.4% in February. After falling sharply in some cases in recent months, the price of lumber now rose by double digits for the first time in a long time, but remains 63.6% below the year-earlier level. It remains to be seen whether this is a permanent trend reversal. The price decline in recent months was mainly due to a low in the construction sector. The subindex for agricultural raw materials was 32.8% lower in the reporting month than a year earlier.
The sub-index for non-ferrous metals fell 2.7% in February, down 18.5% from February 2022.
The sub-index for iron ore and steel scrap rose slightly by 1.1% and was 27.1% lower than a year earlier.
The index for industrial raw materials decreased by 0.3% on average in February (euro basis + 0.3%) and was 24.1% lower than a year earlier. The index reached a value of 126 points (euro basis 134.5 points).
Index for food, beverages and tobacco continues to fall slightly
The index for food, beverages and tobacco rose by 2.5% in February compared with the previous month and was 3.3% lower than in the same month a year earlier. Individual prices in the subindex developed quite differently. The most marked change was in the price of coffee, which, after falling for several months in succession, was now up 11.4% on the previous month. The main reason for this was a poor harvest in Brazil, the main producing country, due to drought, frost and extreme rainfall. Increased labor and energy costs in the growing countries, as well as higher freight costs, have also caused the price of coffee to rise again. In the future, coffee prices are expected to fluctuate more as the coffee plant is very sensitive and extreme weather events will increase due to climate changes.
Overall, the index for food, beverages and tobacco rose by an average of 2.5% for the month (euro basis: 3.0%) and stood at 158 points (euro basis: 168.5 points).