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Economy in Brief

FIBER: Industrial Commodity Prices Ease
by Tom Moeller  November 10, 2017

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) slipped 1.4% during the last four weeks, but gained 11.5% in the last twelve months. The latest index level of 159.45 stood more than one-quarter higher than the late-2015 low. Recent price improvement comes at a time when factory output increased 1.0% y/y following little change in 2016.

Prices in the crude oil & benzene group showed strength last month, posting a 7.1% rise, up 16.4% y/y. The gain was led by a 12.8% increase (28.0% y/y) in crude oil prices to an average $54.59 per barrel. Benzene prices have increased 12.7% in four weeks and by more than one-third y/y. In other sectors, prices mostly were weak. Prices in the metals sector declined 2.9% during the last four weeks, but still have risen nearly one-quarter y/y. Steel scrap prices declined 10.4% during the last month, but still rose by one-half y/y. Aluminum prices held steady over four weeks, but increased 22.9% y/y. Moving higher were copper scrap prices by 2.7% over the last four weeks and by 31.9% during the last year. In the miscellaneous group, prices declined 5.1% during the last month, but rose 8.5% y/y. Framing lumber prices eased 2.0% in recent weeks, but were up one-quarter y/y. Prices for structural panels fell 5.0% in the last month yet rose 39.1% y/y. Natural rubber costs declined 5.2% m/m and fell 1.8% y/y. In the textile group, prices were little changed last month and rose a minimal 1.2% y/y. Cotton prices were fairly steady m/m and down slightly y/y. Burlap prices also were roughly unchanged over the last four weeks but worked 14.6% higher y/y.

Further price improvement may be coming. The current industrial output projection from the National Association for Business Economics (NABE) calls for a 1.9% increase in output during all of 2017 and a 2.3% rise in 2018. During the last ten years, there has been a 52% correlation between the three-month change in prices and the change in U.S. industrial output. In addition, factory sector production in the European Union and Japan is strengthening.

Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases. The NABE forecast is in the SURVEYS database.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2016 2015 2014
All Items -1.4 1.9 3.5 11.5 19.2 -16.3 -10.0
 Textiles -0.0 -0.0 -1.1 1.2 2.8 2.2 -4.2
  Cotton (cents per pound) -0.1 -2.1 -9.9 -1.6 10.2 2.6 -24.2
 Metals -2.9 4.4 12.4 23.1 32.9 -27.8 -8.7
  Aluminum ($ per metric ton) -0.0 8.1 12.9 22.9 13.0 -19.2 9.4
  Copper Scrap (cents per pound) 2.7 7.4 24.2 31.9 17.3 -27.0 -12.0
  Steel Scrap ($ per ton) -10.4 -2.8 0.0 46.5 74.5 -53.8 -18.6
 Crude Oil & Benzene 7.1 9.7 10.0 16.4 20.4 -19.4 -26.5
  Crude Oil (WTI, $ per Barrel) 12.8 15.5 21.3 28.0 44.3 -35.8 -43.2
 Miscellaneous -5.1 -2.1 -2.7 8.5 21.7 -18.0 -6.7
  Framing Lumber ($ per 1000 board ft.) -2.0 0.9 0.5 24.9 12.9 -16.4 -1.6
  Natural Rubber (cents per pound) -5.2 -9.8 -23.8 -1.8 89.4 -22.5 -32.3
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