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Economy in Brief

FIBER: Industrial Commodity Prices Show Moderate Improvement
by Tom Moeller February 6, 2012

Industrial commodity prices recently have risen with evidence that manufacturing sector activity is strengthening. At 167.6, the latest price index from the Foundation for International Business and Economic Research (FIBER) was 5.7% higher than its December low. There's been improvement in certain metals, crude oil and wood prices. During the last ten years there has been a 44% correlation between the three-month change in prices and the change in factory sector industrial production.

In the textile group cotton prices have bottomed following a decline early last year when prices halved. Burlap, used as a reinforcing material, prices also have improved moderately, following a near-halving early last year. Additionally, metals prices have improved moderately led by copper scrap and aluminum. Here again these gains follow extreme weakness early last year. Steel scrap and other metals, however, either recently have shown limited strength or moved sideways.

Prices in the crude oil & benzene group have improved led by higher prices for WTI crude. Crude oil costs recently have ranged just under $100 per barrel versus the autumn lows near $80. In the miscellaneous group, lumber prices also have bounced with the stabilization of home building activity. Framing lumber and plywood prices have risen roughly 15% after collapsing early in 2010. Natural rubber prices have similarly bounced.

Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.

A Theory of Asset Price Booms and Busts and the Uncertain Return to Innovation from the Federal Reserve Bank of Philadelphia is available here.

FIBER Industrial Materials Price Index (1990=100) 02/03/12 Y/Y % 2011 2010 2009
All Items 167.6 -8.6 172.9 157.7 121.4
 Textiles 80.5 -10.8 86.1 81.2 73.3
  Cotton (cents per pound) 86.7 -47.2 132.6 87.8 52.2
 Metals 262.7 -14.0 278.5 239.9 167.9
  Aluminum ($ per metric ton) 2,200.0 -12.5 2,400 2,172 1,662
  Copper Scrap (cents per pound) 378.3 -16.2 400.1 326.5 195.2
  Steel Scrap ($ per ton) 401.7 -7.1 412.4 325.7 203.4
 Crude Oil & Benzene 204.8 3.2 199.3 182.0 150.9
  Crude Oil (WTI, $ per Barrel) 96.4 5.4 95.1 79.5 61.4
 Miscellaneous 188.1 -6.5 190.5 178.8 127.6
  Framing Lumber ($ per 1000 board ft.) 284 -6.3 273 282 221
  Natural Rubber (cents per pound) 231.5 -27.0 261.8 181.8 83.0

FIBER is the Foundation for International Business & Economic Research

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