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Economy in Brief

FIBER: Industrial Commodity Price Declines Are Broad-Based
by Tom Moeller  June 11, 2012

A loss of forward economic momentum in industrial countries, worldwide, has prompted notable commodity price declines across categories. At 163.7, the latest price index from the Foundation for International Business and Economic Research (FIBER) was down 4.3% from its April high and off 7.2% from one year ago. 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 metals group, prices have fallen 17.2% y/y led lower by aluminum prices which are off one quarter y/y and by nearly one-third from the 2011 peak. Declines of copper scrap also have been sizable though steel scrap prices have remained relatively firm. Textile prices also have fallen sharply (-14.1% y/y) led by declines in cotton prices, which are down by one-half y/y and by two-thirds from the 2011 peak.

Lower crude oil prices, down 16.8% y/y, have added to the weakness in the overall pricing environment. Prices for the petro-chemical benzene have shown lesser declines. Only in the miscellaneous group have prices shown relative strength.

Overall, this index has risen 10.5% y/y led by higher lumber & plywood prices, which have been bolstered by strong world-wide demand and limited supplies. Elsewhere, natural rubber pries have weakened with lessened strength in global motor vehicle sales.

Relating Commodity Prices to Underlying Inflation: The Role of Expectations from the Federal Reserve Bank of Dallas is available here.

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

FIBER Industrial Materials Price Index (1990=100) 06/08/12 Y/Y % 2011 2010 2009
All Items 163.7 -7.2 172.9 157.7 121.4
 Textiles 76.4 -14.1 86.1 81.2 73.3
  Cotton (cents per pound) 67.6 -55.1 132.6 87.8 52.2
 Metals 237.0 -17.2 278.5 239.9 167.9
  Aluminum ($ per metric ton) 1,946.5 -25.8 2,400 2,172 1,662
  Copper Scrap (cents per pound) 339.6 -16.4 400.1 326.5 195.2
  Steel Scrap ($ per ton) 399.0 -1.1 412.4 325.7 203.4
 Crude Oil & Benzene 191.8 -7.8 199.3 182.0 150.9
  Crude Oil (WTI, $ per Barrel) 84.8 -16.8 95.1 79.5 61.4
 Miscellaneous 208.3 10.5 190.5 178.8 127.6
  Framing Lumber ($ per 1000 board ft.) 343 31.4 273 282 221
  Natural Rubber (cents per pound) 242.4 -8.1 261.8 181.8 83.0
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