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Economy in Brief

FIBER: Industrial Commodity Prices Are Mixed
by Tom Moeller  August 13, 2012

Weakening industrial economies have been accompanied by mixed pricing patterns in commodities. At 162.5, the latest price index from the Foundation for International Business and Economic Research (FIBER) is 5.2% lower than its April high and down 3.7% 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.

Prices in the metals group, prices have fallen roughly 3.5% during just the last two weeks (-18.7% y/y). Lower steel scrap prices have led the weakness with an 11.5% drop, down one-quarter y/y. Copper scrap prices (-14.9% y/y) similarly have shown notable weakness in tandem with news of weakening economies in Europe. Likewise, aluminum prices have moved moderately lower in the last few weeks but are 21.2% below last year.

Conversely, geopolitical risks in the Middle East drove crude oil prices to $93.36 per barrel (8.9% y/y) on Friday from a late-June low of $77.79. In addition, textile prices strengthened during the last several weeks. As of Friday, cotton prices recouped two months of decline but still were roughly one quarter below the year ago level. Finally, prices in the miscellaneous group strengthened led by a surge in plywood prices (39.9% y/y). Also, framing lumber prices have risen 21.3% y/y. Conversely, natural rubber prices are at their lowest since 2010.

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) 08/10/12 Y/Y % 2011 2010 2009
All Items 162.5 -3.7 172.9 157.7 121.4
 Textiles 77.2 -5.9 86.1 81.2 73.3
  Cotton (cents per pound) 71.4 -25.9 132.6 87.8 52.2
 Metals 220.9 -18.7 278.5 239.9 167.9
  Aluminum ($ per metric ton) 1,865.5 -21.2 2,400 2,172 1,662
  Copper Scrap (cents per pound) 339.9 -14.9 400.1 326.5 195.2
  Steel Scrap ($ per ton) 307.7 -26.7 412.4 325.7 203.4
 Crude Oil & Benzene 206.4 5.6 199.3 182.0 150.9
  Crude Oil (WTI, $ per Barrel) 93.4 8.9 95.1 79.5 61.4
 Miscellaneous 206.7 9.4 190.5 178.8 127.6
  Framing Lumber ($ per 1000 board ft.) 330 21.3 273 282 221
  Natural Rubber (cents per pound) 183.2 -26.0 261.8 181.8 83.0
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