The Materials Price Index (MPI) lost another 2.4 percent last week, taking its cumulative fall over the last four months to 17 percent. For a second consecutive week, the MPI's retreat was broad-based, with nine of 10 sub-indexes declining. Oil and rubber prices once again led the retreat, down 4.5 percent and 13.6 percent, respectively. Only pulp prices rose, moving up 2.8 percent.

Natural rubber prices have dropped by one-quarter over the last two weeks, reaching a low point for 2017. An end to seasonal rains and the release of stockpiled inventory have improved the supply picture while concern over Chinese car sales have undercut the demand outlook. The combination has sent prices tumbling. Alongside oil and rubber, ferrous prices also were down sharply, with the sub-index slipping 4.0 percent as iron ore prices continue to slide on Chinese steel production fears.

More generally, growing worries about oversupply continue to swirl around commodity markets. Last week's macroeconomic announcements do indicate global industrial activity is holding up well, although the mood is no longer as bright as it was a few months ago. Markets in the United States and Europe are seeing moderate growth; however, it is Asia, and especially China, where markets are focused. For China, there is the growing realization that the second half of the year may not match the first six months of 2017. There also is the feeling that U.S. stimulus in the form of tax cuts and infrastructure funding may be delayed. The net result is that some of the optimism priced into commodities late last year is now coming back out of markets.