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Economy in Brief

FIBER: Industrial Commodity Prices Remain Soft
by Tom Moeller  November 10, 2014

There hasn't been enough strength recently in the U.S. industrial sector to fully offset developing economic weakness in the rest of the world. As a result, prices for industrial materials remain under pressure. The industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), fell 3.4% as of Friday versus one year ago. Weakness amongst the component series was widespread.

An 8.0% y/y price decline in the crude oil & benzene grouping led the weakness, reflecting a 17.5% y/y decline in the price of WTI crude oil to $77.85 per barrel. That's down by roughly one-quarter from the June high of $107.53. In addition, prices for the petrochemical benzene are down roughly one-third from late-June. Prices in the miscellaneous category also were weak. They've softened 5.0% from last year as natural rubber prices fell roughly one-third y/y. Framing lumber also eased 3.1% y/y. Offsetting these declines was 12.2% y/y increase in random lengths of structural composites. Textile prices also worked 2.7% lower during the last year, paced by a 16.5% y/y decline in cotton prices. A 1.3% y/y increase in burlap prices countered this decline. Metals prices were not as weak, up 0.7% during the last year. Aluminum prices have been buoyant, up 15.6% y/y. Steel scrap prices also gained 1.7% y/y but they're off sharply from the early-year highs. To the downside have been copper scrap prices, off 6.2% y/y.

Future support for commodity prices may be on the way. The current industrial output projection from the National Association for Business Economics calls for 4.0% growth during all of this year, then 3.6% 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) 11/7/14 Y/Y % 2013 2012 2011
All Items 157.65 -3.4 169.0 166.4 173.0
 Textiles 74.66 -2.7 78.2 77.9 86.1
  Cotton (cents per pound) 62.06 -16.5 79.6 74.5 132.8
 Metals 233.59 0.7 236.3 243.0 278.7
  Aluminum ($ per metric ton) 2,052.00 15.6 1,846.3 2,019.6 2,400.9
  Copper Scrap (cents per pound) 302.97 -6.2 332.4 360.6 400.3
  Steel Scrap ($ per ton) 341.33 1.7 346.0 366.7 412.6
 Crude Oil & Benzene 184.58 -8.0 207.7 204.1 199.3
  Crude Oil (WTI, $ per Barrel) 77.85 -17.5 97.9 94.2 95.0
 Miscellaneous 194.52 -5.0 218.3 205.3 190.6
  Framing Lumber ($ per 1000 board ft.) 377 -3.1 383 321 273
  Natural Rubber (cents per pound) 117.69 -35.5 189.9 211.9 262.3
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