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Economy in Brief

FIBER: Industrial Commodity Prices Ease
by Tom Moeller  April 9, 2018

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 0.9% during the last four weeks. During the last year, however, prices rose 6.1%, and they were up by one-third versus the early-2016 low.

Showing the greatest weakness recently were prices in the miscellaneous sector which fell 1.7% during the last month (+4.4% y/y). Framing lumber prices declined 4.5% during the last four weeks (+21.6% y/y) and prices for structural panels eased 0.4% yet were up one-third y/y. Prices in the metals sector declined 1.2% during the last month, but they improved 10.5% y/y. Weakness was led by a 6.3% one-month decline in aluminum prices (+2.0% y/y). Copper scrap prices eased 2.5% last month (+15.4% y/y). To the upside were steel scrap prices which rose 6.3% during the last four weeks (+18.0% y/y). Amongst other metals, lead prices fell 1.1% during the last month, but gained 4.1% y/y. Zinc prices slipped 0.8% during the last four weeks, but rose 19.3% y/y. Prices in the textile group eased 0.7% (+1.0% y/y). Cotton prices fell 3.1% (+7.6% y/y) over the last month and burlap prices eased 1.6% both m/m and y/y. To the upside, crude oil & benzene increased by a modest 0.7% last month (10.9% y/y). Crude oil prices improved 3.6% (24.6% y/y) to an average $63.69 per barrel. Benzene prices fell, however, by 3.3% in the last four weeks (+11.2% y/y).

Renewed strength in prices overall may be coming. The consensus forecast for industrial output from the National Association for Business Economics (NABE) calls for a 3.3% rise in 2018 and 2.6% growth in 2019. During the last ten years, there has been 50% 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 -0.9 2.9 3.0 6.1 6.7 19.2 -16.3
 Textiles -0.7 0.2 2.5 1.0 3.0 2.8 2.2
  Cotton (cents per pound) -3.1 2.7 16.9 7.6 9.8 10.2 2.6
 Metals -1.2 -1.2 1.5 10.5 18.6 32.9 -27.8
  Aluminum ($ per metric ton) -6.3 -11.3 -5.8 2.0 26.0 13.0 -19.2
  Copper Scrap (cents per pound) -2.5 -6.4 3.7 15.4 29.3 17.3 -27.0
  Steel Scrap ($ per ton) 6.3 16.7 17.3 18.0 16.8 74.5 -53.8
 Crude Oil & Benzene 0.7 0.2 11.4 10.9 8.1 20.4 -19.4
  Crude Oil (WTI, $ per Barrel) 3.6 4.2 26.4 24.6 10.9 44.3 -35.8
 Miscellaneous -1.7 10.4 0.7 4.4 -0.5 21.7 -18.0
  Framing Lumber ($ per 1000 board ft.) -4.5 12.9 12.2 21.6 20.0 12.9 -16.4
  Natural Rubber (cents per pound) -2.4 5.3 -1.7 -27.2 -29.6 89.4 -22.5
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