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Economy in Brief

FIBER: Industrial Commodity Prices Fall Further
by Tom Moeller  January 19, 2015

Prices for industrial materials continue to exhibit broad-based decline. The industrial commodity price index from the Foundation for International Business and Economic Research (FIBER) fell 11.8% through last week versus one year ago. Declines amongst the component series were widespread.

The crude oil & benzene grouping led the weakness with a 35.0% y/y decline, reflecting a 49.7% y/y drop in the price of WTI crude oil to $46.72 per barrel. The price is down 56.2% since June. Prices for the petrochemical benzene fell nearly two-thirds from early-July. The metals group followed with an 11.0% y/y decline, off 14.2% versus the August high. Copper scrap prices fell 19.3% y/y and steel scrap prices were off 18.9% y/y. Aluminum prices were bucking the downward trend until recently. They're up 3.1% y/y but they've fallen 14.5% since late-November. Prices in the miscellaneous category also were weak. They've softened 4.7% from last year as natural rubber prices fell roughly one-quarter y/y. Framing lumber also eased 2.8% y/y. Prices for random lengths of structural composite remain 6.8% higher y/y but since late-October they've moved sideways. Textile prices also declined 4.7% during the last year, paced by a roughly one-quarter y/y decline in cotton prices. A 2.0% y/y increase in burlap prices countered this decline.

Future support for commodity prices may be on the way. The current industrial output projection from the National Association for Business Economics calls for 3.5% growth in industrial production in 2015. During the last ten years there has been a 52% correlation between the three-month change in prices and the change in industrial output.

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

FIBER Industrial Materials Price Index (1990=100) 1/16/15 Y/Y % 2014 2013 2012
All Items 145.85 -11.8 163.5 169.0 166.3
 Textiles 74.24 -4.7 76.8 78.2 77.8
  Cotton (cents per pound) 58.64 -27.0 73.6 79.6 74.4
 Metals 213.96 -11.0 237.8 236.2 242.7
  Aluminum ($ per metric ton) 1,778.1 3.1 1,864.9 1,846.7 2,016.6
  Copper Scrap (cents per pound) 267.91 -19.3 311.7 332.3 360.3
  Steel Scrap ($ per ton) 310.80 -18.9 358.3 345.8 366.5
 Crude Oil & Benzene 135.61 -35.0 205.2 207.7 204.0
  Crude Oil (WTI, $ per Barrel) 46.72 -49.7 93.5 97.9 94.2
 Miscellaneous 190.85 -4.9 199.6 218.3 205.2
  Framing Lumber ($ per 1000 board ft.) 383 -2.8 383 383 321
  Natural Rubber (cents per pound) 123.1 -27.5 140.2 190.0 211.8
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