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Economy in Brief

FIBER: Industrial Commodity Price Gains Have Slowed
by Tom Moeller  March 19, 2018

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) improved 1.2% (7.3% y/y) during the last four weeks as factory sector production around the world continued to improve. The increase moderated, however, from earlier rates of growth as prices slipped during the last two weeks from the roughly four-year high reached in early-March.

Showing the greatest weakness recently were prices in the metals sector which fell 2.3% during the last month, but they improved 13.5% y/y. Weakness was led by a 2.6% one-month decline in aluminum prices. They increased, however, by 11.1% y/y. Copper scrap prices eased modestly last month but gained 18.7% y/y. To the upside were steel scrap prices by 2.8% during the last four weeks, rising 18.5% y/y. Amongst other metals, lead prices fell 6.3% during the last month, but gained 6.3% y/y. Zinc prices fell 6.8% during the last four weeks and rose 18.5% y/y.

Crude oil & benzene increased by a lessened 0.9% last month (9.8% y/y). Crude oil prices improved 1.9% (25.8% y/y) to an average $61.29 per barrel. Benzene prices improved 0.9% in the last four weeks and rose 4.1% y/y. Prices in the textile group gained 1.0% last month and rose 1.7% y/y. Cotton prices strengthened 9.2% m/m and by 8.0% y/y. A 3.7% decline (+4.6% y/y) in burlap prices offset this strength. Continuing strong were prices in the miscellaneous group which improved 4.5% over the last four weeks and by 5.5% y/y. Within this group, natural rubber prices rose 5.3% but they remained down 28.2% y/y. Framing lumber prices increased 3.9% last month and were up by roughly one-quarter y/y. Prices for structural panels increased 5.7% m/m and rose by one-third y/y.

Renewed strength in prices overall may be coming. The current industrial output consensus from the National Association for Business Economics (NABE) calls for 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 continues to improve.

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 2017 2016 2015
All Items 1.2 6.7 5.3 7.3 6.7 19.2 -16.3
 Textiles 1.0 1.9 2.5 1.7 3.0 2.8 2.2
  Cotton (cents per pound) 9.2 12.2 15.1 8.0 9.8 10.2 2.6
 Metals -2.3 6.6 5.8 13.5 18.6 32.9 -27.8
  Aluminum ($ per metric ton) -2.6 4.2 0.1 11.1 26.0 13.0 -19.2
  Copper Scrap (cents per pound) -0.2 4.0 4.2 18.7 29.3 17.3 -27.0
  Steel Scrap ($ per ton) 2.8 24.1 16.6 18.5 16.8 74.5 -53.8
 Crude Oil & Benzene 0.9 0.8 11.7 9.8 8.1 20.4 -19.4
  Crude Oil (WTI, $ per Barrel) 1.9 6.7 26.4 25.8 10.9 44.3 -35.8
 Miscellaneous 4.5 13.7 4.2 5.5 -0.5 21.7 -18.0
  Framing Lumber ($ per 1000 board ft.) 3.9 17.7 24.6 27.1 20.0 12.9 -16.4
  Natural Rubber (cents per pound) 5.3 10.2 -7.8 -28.2 -29.6 89.4 -22.5
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