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Economy in Brief

FIBER: Industrial Commodity Prices Weaken Sharply
by Tom Moeller  October 6, 2014

Since late-August, the industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), has shown outsized weakness. The decline amounts to 4.1% (-3.1% y/y) and has been widespread amongst sectors.

A 5.2% price decline (-5.0% y/y) in the miscellaneous category paced the shortfall. That was led by a 12.6% drop (-39.6% y/y in natural rubber prices. It was followed by a 4.9% decline (+1.0% y/y) in framing lumber prices and a 1.0% drop (+6.3% y/y) in structural panel prices. Metals prices also were off 5.1% (+1.9% y/y), reflecting an 8.1% drop (+6.8% y/y) in the cost of aluminum. Not far behind was a 4.7% decline (-6.8% y/y) in copper scrap prices. Zinc prices followed with a 3.7% shortfall (+20.3% y/y) but steel scrap prices nudged 0.7% higher (7.0% y/y). Prices in the crude oil & benzene group similarly fell 4.2% (-5.2% y/y). It reflected a 2.5% drop (-10.5% y/y) in crude oil prices outpaced by a 15.8% decline (-4.1% y/y) in benzene costs. Showing more moderate weakness were prices in the textile group, off 1.4% (-4.6% y/y). Cotton prices were off 7.9% (-26.3% y/y) but burlap prices fell just 1.1% (+1.5% y/y).

Future support for commodity prices may be in prospect. The current industrial output projection from the National Association for Business Economics calls for 4.0% growth during all of this year then 3.7% 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) 10/03/14 Y/Y % 2013 2012 2011
All Items 159.71 -3.1 169.0 166.4 173.0
 Textiles 74.72 -4.6 78.18 77.9 86.1
  Cotton (cents per pound) 63.81 -21.4 79.6 74.5 132.8
 Metals 235.36 1.9 236.3 243.0 278.7
  Aluminum ($ per metric ton) 1,869.0 4.7 1,846.3 2,019.6 2,400.9
  Copper Scrap (cents per pound) 303.54 -7.2 332.4 360.6 400.3
  Steel Scrap ($ per ton) 359.0 7.0 346.0 366.7 412.6
 Crude Oil & Benzene 200.13 -5.2 207.7 204.1 199.3
  Crude Oil (WTI, $ per Barrel) 90.59 -12.3 97.9 94.2 95.0
 Miscellaneous 194.27 -5.0 218.3 205.3 190.6
  Framing Lumber ($ per 1000 board ft.) 385 1.0 383 321 273
  Natural Rubber (cents per pound) 110.11 -39.1 189.9 211.9 262.3
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