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Economy in Brief

FIBER: Industrial Commodity Prices Weaken
by Tom Moeller  April 17, 2013

Commodity prices are quite sensitive to changes in the economic environment, and the latest signals suggest softening forward momentum. Yesterday's industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), was 173.0 and 1.9% lower than in mid-March. Nevertheless, it still was 3.2% higher than April of 2012.

Prices have been weakest in the metals group where aluminum prices are one-third below the 2011 high and off 13.3% during the last two months. Copper prices are down 13.2% since February. Steel scrap (-8.6% y/y) and lead prices (-1.8% y/y) have been weak as well. Crude oil & benzene prices have been similarly soft. Crude oil prices are nearly one-quarter below (-14.6% y/y) the high of $112.79 per barrel in April 2011. Prices for the petrochemical benzene are off 12.3% (+3.3% y/y) since this past February. In the textile group, prices have been soft as well. Cotton prices have fallen more than one-half since the 2011 high and recently reversed some of this past winter's uptick.

To the upside, prices in the miscellaneous group have risen nearly one-quarter y/y. Prices for both framing lumber and structural panels, up by one-half y/y, have led the advance. Conversely, rubber prices moved down by roughly one-quarter y/y.

The current industrial output forecast from the National Association for Business Economics calls for softer 2.5% growth this year but then a pickup to 3.5% in 2014. These growth rates suggest some future firming of industrial commodity prices. During the last ten years there has been a 42% correlation between the three-month change in prices and the change in factory sector industrial production.

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

FIBER Industrial Materials Price Index (1990=100) 04/16/13 Y/Y % 2012 2011 2010
All Items 173.0 3.2 166.4 173.0 157.9
 Textiles 78.9 -0.2 77.9 86.1 81.3
  Cotton (cents per pound) 80.0 -1.3 74.5 132.8 87.8
 Metals 230.5 -7.4 243.0 278.7 240.0
  Aluminum ($ per metric ton) 1,803.5 -11.0 2,019.6 2,400.9 2,172.1
  Copper Scrap (cents per pound) 322.9 -11.6 360.6 400.3 326.8
  Steel Scrap ($ per ton) 368.0 -8.6 366.7 412.6 326.5
 Crude Oil & Benzene 198.2 -5.2 204.1 199.3 182.0
  Crude Oil (WTI, $ per Barrel) 87.9 -14.6 94.2 95.0 79.4
 Miscellaneous 243.1 21.4 205.3 190.6 179.1
  Framing Lumber ($ per 1000 board ft.) 449 51.2 321 273 283
  Natural Rubber (cents per pound) 183.1 -20.4 211.9 262.3 182.9
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