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Economy in Brief

FIBER: Industrial Commodity Prices Strengthen
by Tom Moeller  May 19, 2014

Industrial commodity prices recently exhibited moderate upward movement. Friday's industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), was 167.1, up 2.0% since early-February and at the high end of the range since mid-2013. The gain accompanied 2.9% growth in factory sector output during the last twelve months.

Continued strength in industrial commodity prices is in the offing. The current industrial output projection from the National Association for Business Economics calls for 3.2% growth during all of this year then a pickup to 3.4% growth in 2015. During the last ten years there has been a 52% correlation between the three-month change in prices and the change in factory sector output.

A 5.8% rise in prices in the miscellaneous category has provided the strength to the overall FIBER index since early February. Leading the price rise was a 53% gain in tallow prices following three years of weakness. Prices for random lengths of structural composite recovered to the highest level since October. These gains were offset by declines in prices of framing lumber and rubber. Textile prices also improved 1.0% during the last few months. Burlap prices have been strong, up 3.6% in the last three months and 12.8% since the early-September low. Cotton prices bounced 2.3% higher following little movement since early-2012.

To the downside recently have been prices in the crude oil & benzene grouping, though they have strengthened considerably since mid-2011. Prices for the petro-chemical benzene fell 16.5% since early-February, but are moderately higher year-to-year. A 4.3% rise in crude oil prices since February offset some of the recent weakness, but prices have been moving sideways, in a broad range, since early-2011. In the metals group, prices also have been moving sideways of late. They are down, however, by roughly one-quarter since the 2011 high. A 5.4% rise in steel scrap prices since early-February was a modest bounce after a one-third price decline since early-2011. Aluminum and copper scrap prices recently firmed but have declined 4-5% during the last year.

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

FIBER Industrial Materials Price Index (1990=100) 05/16/14 Y/Y % 2013 2012 2011
All Items 167.1 -1.6 169.0 166.4 173.0
 Textiles 78.9 -0.4 78.18 77.9 86.1
  Cotton (cents per pound) 84.0 3.3 79.6 74.5 132.8
 Metals 237.7 4.1 236.3 243.0 278.7
  Aluminum ($ per metric ton) 1,740.9 -4.4 1,846.3 2,019.6 2,400.9
  Copper Scrap (cents per pound) 313.0 -4.5 332.4 360.6 400.3
  Steel Scrap ($ per ton) 371.8 6.4 346.0 366.7 412.6
 Crude Oil & Benzene 212.0 3.3 207.7 204.1 199.3
  Crude Oil (WTI, $ per Barrel) 101.5 7.3 97.9 94.2 95.0
 Miscellaneous 205.5 -9.4 218.3 205.3 190.6
  Framing Lumber ($ per 1000 board ft.) 336 -1.8 383 321 273
  Natural Rubber (cents per pound) 143.5 -25.5 189.9 211.9 262.3
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