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Economy in Brief

FIBER: Industrial Commodity Prices Show Improvement
by Tom Moeller  August 12, 2013

Following softness earlier this year, the recent firming of industrial commodity prices indicate that a corner toward improvement has been turned. Friday's industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), was 166.0, up 2.0% from early-July.

Price improvement has been across the component series. In the metals group, prices have risen an average 13.0% since late last month. The gain has been led by an increase in prices for copper scrap, lead and zinc. Also, earlier declines in aluminum and steel scrap prices have stabilized. Though they've weakened just recently, prices in the crude oil and benzene grouping have risen 5.4% from mid-April. The gain has been led by a 20.0% jump in the price of crude oil to $106.00 per barrel. Soft prices for the petro-chemical benzene have countered the rise.

Improved pricing power extends to other groupings. Prices in the miscellaneous area have risen 3.0% since mid-July. Higher wood prices account for the strength as framing lumber and structural panel costs have jumped 8.0-to-10.0%. Regardless, these prices remain down by one-quarter from their peaks this past spring. Natural rubber prices have stabilized recently but are down sharply from the January highs. Also moving 1.0% upward have been textile prices. The gain here has been led by a 7.0% jump in cotton prices in the last three weeks. The earlier sharp decline in burlap prices has stabilized.

The current industrial output forecast from the National Association for Business Economics calls for 3.1% 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) 08/08/13 Y/Y % 2012 2011 2010
All Items 166.0 2.2 166.4 173.0 157.9
 Textiles 78.6 1.8 77.9 86.1 81.3
  Cotton (cents per pound) 79.8 20.7 74.5 132.8 87.8
 Metals 228.6 3.5 243.0 278.7 240.0
  Aluminum ($ per metric ton) 1,772.0 -5.1 2,019.6 2,400.9 2,172.1
  Copper Scrap (cents per pound) 314.0 -8.8 360.6 400.3 326.8
  Steel Scrap ($ per ton) 324.3 -6.7 366.7 412.6 326.5
 Crude Oil & Benzene 210.8 2.1 204.1 199.3 182.0
  Crude Oil (WTI, $ per Barrel) 106.4 18.3 94.2 95.0 79.4
 Miscellaneous 209.5 1.3 205.3 190.6 179.1
  Framing Lumber ($ per 1000 board ft.) 335 5.0 321 273 283
  Natural Rubber (cents per pound) 176.0 -13.1 211.9 262.3 182.9
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