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Economy in Brief

FIBER: Industrial Commodity Prices Pull Back
by Tom Moeller  June 20, 2014

Industrial commodity prices recently have retraced gains logged since early-February. The industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), averaged 165.09 this week, down 1.4% (-0.1% y/y) from the high reached at the end of May. It was the lowest level since the second week of February.

A 3.3% decline in prices in the miscellaneous category provided much of the weakness during the last month. Leading the shortfall was a 5.2% decline (-7.8% y/y) in prices for random lengths of structural panel composite wood. Framing lumber prices were off 2.6% (+12.1% y/y) in just the last two weeks but rubber prices increased 3.1% (-22.7% y/y) in that time period. In the metals group, prices have fallen 1.5% (5.1% y/y) during the last eight weeks. The decline was lead by a 4.8% drop (+9.2% y/y) in steel scrap prices. Prices were roughly 20% below the early-2011 high. Working the other way, aluminum prices have firmed 6.3% (1.1% y/y) since early-February and copper scrap prices rose 2.7% (-3.5% y/y). Textile prices declined 1.4% (-1.0% y/y) during the last six weeks led by an 8.4% drop (-5.3% y/y in cotton prices. Burlap prices also were down 2.8% (-1.6 y/y), though they've risen sharply since the early-September 2013 low.

Offsetting these weaknesses were crude oil & benzene prices which strengthened 1.8% since early-May. The gain was led by a 6.3% rise (9.8% y/y) in crude oil costs to $106.69 per barrel. Offsetting the gain, somewhat, was a 2.5% decline (+2.8 y/y) in prices for the petro-chemical benzene.

Renewed strength in industrial commodity prices is in the offing. The current industrial output projection from the National Association for Business Economics calls for 3.7% growth during all of this year then 3.5% 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.

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

FIBER Industrial Materials Price Index (1990=100) 06/20/14 Y/Y % 2013 2012 2011
All Items 165.09 -0.1 169.0 166.4 173.0
 Textiles 77.98 -1.0 78.18 77.9 86.1
  Cotton (cents per pound) 79.26 -5.3 79.6 74.5 132.8
 Metals 235.78 5.1 236.3 243.0 278.7
  Aluminum ($ per metric ton) 1,816.30 1.1 1,846.3 2,019.6 2,400.9
  Copper Scrap (cents per pound) 304.62 -3.5 332.4 360.6 400.3
  Steel Scrap ($ per ton) 357.00 9.2 346.0 366.7 412.6
 Crude Oil & Benzene 214.91 4.1 207.7 204.1 199.3
  Crude Oil (WTI, $ per Barrel) 106.69 9.8 97.9 94.2 95.0
 Miscellaneous 199.93 -5.5 218.3 205.3 190.6
  Framing Lumber ($ per 1000 board ft.) 371 12.1 383 321 273
  Natural Rubber (cents per pound) 147.60 -22.7 189.9 211.9 262.3
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