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Economy in Brief

FIBER: Industrial Commodity Prices Strengthen Selectively
by Tom Moeller  April 20, 2018

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 0.4% during the last four weeks. The improvement was powered by just two sectors, metals & petroleum. During the last year, prices rose 7.9%, up by more than one-third versus the early-2016 low.

Showing the greatest strength recently were prices in the metals sector They rose 3.3% during the last month and improved 20.2% y/y. Strength was led by an 18.0% one-month jump in aluminum prices (28.0% y/y). Steel scrap prices increased 4.4% during the last four weeks (36.8% y/y) and copper scrap prices rose 1.1% last month (21.9% y/y). Amongst other metals, there was weakness. Lead prices were off 1.2% during the last month, but gained 6.6% y/y. Zinc prices fell 2.8% during the last four weeks, but rose 22.7% y/y. Also strengthening was the crude oil & benzene sector which increased by 2.0% last month (11.3% y/y). Crude oil prices improved 5.8% (30.1% y/y) to an average $67.57 per barrel. Benzene prices eased, however, by 0.5% in the last four weeks (+4.4% y/y). Offsetting this strength were lower prices in the miscellaneous sector which fell 2.0% during the last month (+2.4% y/y). Framing lumber prices declined 2.4% during the last four weeks (+14.1% y/y) and prices for structural panels fell 2.4% in the last month, yet were up one-quarter y/y. Prices in the textile group eased 0.4% in the last four weeks (+0.7% y/y). Cotton prices held steady (+5.6% y/y) over the last month and burlap prices fell 3.6% (-1.4% y/y).

Renewed strength in prices overall may be coming. The consensus forecast for industrial output from the National Association for Business Economics (NABE) calls for a 3.3% rise in 2018 and 2.6% growth in 2019. During the last ten years, there has been 50% correlation between the three-month change in prices and the change in U.S. industrial output. In addition, factory sector production in the European Union and Japan continues to improve.

Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases. The NABE forecast is in the SURVEYS database.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2017 2016 2015
All Items 0.4 2.6 4.6 7.9 6.7 19.2 -16.3
 Textiles -0.4 -0.7 2.6 0.7 3.0 2.8 2.2
  Cotton (cents per pound) 0.0 0.2 20.1 5.6 9.8 10.2 2.6
 Metals 3.3 0.7 6.1 20.2 18.6 32.9 -27.8
  Aluminum ($ per metric ton) 18.0 10.6 14.6 28.0 26.0 13.0 -19.2
  Copper Scrap (cents per pound) 1.1 -3.0 -1.6 21.9 29.3 17.3 -27.0
  Steel Scrap ($ per ton) 4.4 12.3 36.8 36.8 16.8 74.5 -53.8
 Crude Oil & Benzene 2.0 1.0 12.3 11.3 8.1 20.4 -19.4
  Crude Oil (WTI, $ per Barrel) 5.8 5.8 30.5 30.1 10.9 44.3 -35.8
 Miscellaneous -2.0 7.9 1.3 2.4 -0.5 21.7 -18.0
  Framing Lumber ($ per 1000 board ft.) -2.4 11.0 12.3 14.1 20.0 12.9 -16.4
  Natural Rubber (cents per pound) -1.0 2.0 4.8 -21.2 -29.6 89.4 -22.5
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