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Economy in Brief

FIBER: Industrial Commodity Prices Post Broad-Based Declines
by Tom Moeller  March 20, 2015

Recent strength in the U.S. factory sector has done little for industrial commodity prices as growth abroad struggles. The industrial commodity price index from the Foundation for International Business and Economic Research (FIBER) declined this week to the lowest level since December 2009. Overall, prices have fallen 14.3% y/y and 15.2% since late-August.

The crude oil & benzene grouping led the decline with a more than one-third drop in prices since early last year. The price for a barrel of WTI crude oil plunged to $43.79 yesterday (-56.2% y/y), down 59.0% from its $106.69 high in June of last year. Prices for the petro-chemical benzene have followed the way down. Prices rallied a bit last week, but they remained 55.7% lower than where they were in January of last year. Metals prices also have improved of late, but they are 21.7% lower since August (-14.9% y/y). Steel scrap prices led the way lower with a 37.5% y/y decline and they are down by nearly one-half from the 2011 high. Copper scrap prices have been similarly weak, posting a 41.9% decline from the 2011 high (-11.7% y/y). Aluminum prices have weakened 14.8% since the late-November high but they remain up 6.0% y/y. In the miscellaneous materials grouping, prices recently rallied but have trended 23.1% lower since August 2013 (-8.6% y/y). Natural rubber prices improved with a 16.4% rise (-20.7% y/y) since the December low. Prices for framing lumber, however, remain weak. They're down 18.1% since early September (-13.4% y/y), reaching the lowest level since 2013. Structural panel prices have been relatively firm, off 9.7% since early November (+2.2% y/y). Prices remain roughly one-quarter from the April 2013 high.Textile prices have shown relative strength with movement roughly sideways. Cotton prices have been flat since November (-30.8% y/y) but burlap prices have risen 11.1% since October (+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 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) 3/19/15 Y/Y % 2014 2013 2012
All Items 141.68 -14.3 163.3 169.0 166.3
 Textiles 74.96 -5.1 76.4 78.2 77.8
  Cotton (cents per pound) 60.66 -30.8 73.4 79.6 74.4
 Metals 195.04 -14.9 237.5 236.3 242.7
  Aluminum ($ per metric ton) 1,771.00 6.0 1,864.6 1,846.2 2,016.6
  Copper Scrap (cents per pound) 258.14 -11.7 311.2 332.4 360.3
  Steel Scrap ($ per ton) 226.67 -37.5 357.9 346.0 366.5
 Crude Oil & Benzene 136.80 -36.2 204.7 207.7 204.0
  Crude Oil (WTI, $ per Barrel) 43.79 -56.2 93.2 97.9 94.2
 Miscellaneous 186.31 -8.6 199.4 218.3 205.2
  Framing Lumber ($ per 1000 board ft.) 335 -13.4 383 383 321
  Natural Rubber (cents per pound) 130.07 -20.7 139.7 190.0 211.8
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