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Economy in Brief

FIBER: Industrial Commodity Prices Remain Soft
by Tom Moeller  September 10, 2018

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) fell 1.2% during the last four weeks and extended the decline in prices since the peak in the middle of June. The decline left the index down 1.1% during the last twelve months.

Recent weakness was paced by a 3.7% one-month decline (-8.0% y/y) in prices in the metals group. Leading the decline were zinc prices which were down 6.9% m/m and were off roughly one-quarter y/y. Steel scrap prices fell 5.9% m/m (+14.2% y/y). Copper scrap prices declined 3.8% (-14.0% y/y) in the last four weeks and lead prices were off 2.6% m/m (-11.7% y/y). Working higher were aluminum prices by 1.0% in the recent four weeks, though they were off 1.1% y/y. In the textile group, prices moved lower as well by 1.3% last month (+0.6% y/y). Cotton prices declined 7.0% over the four weeks (+7.8% y/y) while burlap prices eased 1.0% m/m, down 5.0% y/y. To the upside, prices in the crude oil & benzene group increased 0.6% during the last four weeks (16.4% y/y). Crude oil prices rose 1.2% during the last four weeks and by 41.6% y/y to an average $68.95 per barrel. Accompanying the rise were benzene prices which gained 0.7% m/m and 11.5% y/y. Prices in the miscellaneous sector nudged 0.2% higher during the last four weeks, but fell 4.0% y/y. Natural rubber prices gained 2.7% during the last four weeks but fell 16.7% y/y. Structural panel costs rose 1.9% m/m and 1.2% y/y. To the downside, framing lumber prices declined 2.2% m/m (+12.4% y/y.

Renewed strength in prices overall may be coming. The consensus forecast from the National Association for Business Economics (NABE) calls for a 3.8% rise in industrial output during all of 2018 and 2.8% growth in 2019. During the last ten years, there has been a 66% correlation between the y/y change in industrial commodity prices and the y/y change in factory sector 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 -7.7 -6.1 -1.1 6.7 19.2 -16.3
 Textiles -1.3 -1.7 -1.2 0.6 3.0 2.8 2.2
  Cotton (cents per pound) -7.0 -10.4 -2.7 7.8 9.8 10.2 2.6
 Metals -3.7 -13.6 -11.9 -8.0 18.6 32.9 -27.8
  Aluminum ($ per metric ton) 1.0 -11.0 -3.1 -1.1 26.0 13.0 -19.2
  Copper Scrap (cents per pound) -3.8 -15.9 -14.1 -14.0 29.3 17.3 -27.0
  Steel Scrap ($ per ton) -5.9 -5.5 1.0 14.2 16.8 74.5 -53.8
 Crude Oil & Benzene 0.6 1.8 3.7 16.4 8.1 20.4 -19.4
  Crude Oil (WTI, $ per Barrel) 1.2 5.2 12.2 41.6 10.9 44.3 -35.8
 Miscellaneous 0.2 -11.3 -9.3 -4.0 -0.5 21.7 -18.0
  Framing Lumber ($ per 1000 board ft.) -2.2 -22.2 -11.5 12.4 20.0 12.9 -16.4
  Natural Rubber (cents per pound) 2.7 -8.4 -8.6 -16.7 -29.6 89.4 -22.5
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