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Economy in Brief

FIBER: Industrial Commodity Prices Weaken
by Tom Moeller  September 21, 2018

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) eased 0.3% 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 2.6% during the last twelve months.

Recent weakness continued to be led by a 1.0% m/m decline (-9.4% y/y) in prices in the metals group. Leading the decline were steel scrap prices which fell 5.8% m/m (+5.6% y/y). Zinc prices were down 2.2% m/m and fell by roughly one-quarter y/y. The cost of aluminum declined 1.2% m/m and 5.2% y/y. Copper scrap prices nudged 0.6% higher (-7.5% y/y) in the last four weeks, and lead prices improved 1.9% m/m (-15.2% y/y). In the textile group, prices eased 0.5% last month (+1.1% y/y). Cotton prices declined 3.3% over the last four weeks (+12.4% y/y) while burlap prices held steady m/m, down 2.7% y/y. To the upside, prices in the crude oil & benzene group increased 0.7% during the last four weeks (13.8% y/y). Crude oil prices gained 4.5% during the last four weeks and 39.4% y/y to an average $70.00 per barrel. Accompanying the rise were lower benzene prices which fell 4.7% m/m (+2.5% y/y). Prices in the miscellaneous sector nudged 0.2% higher during the last four weeks, but fell 6.7% y/y. Natural rubber prices gained 1.2% during the last four weeks but fell 11.1% y/y. Structural panel costs rose 2.4% m/m (-5.4% y/y). Framing lumber prices held steady m/m (+4.8% y/y).

Improvement 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 -0.3 -7.7 -6.6 -2.6 6.7 19.2 -16.3
 Textiles -0.5 -1.3 -1.5 1.1 3.0 2.8 2.2
  Cotton (cents per pound) -3.3 -8.7 -3.9 12.4 9.8 10.2 2.6
 Metals -1.0 -13.4 -12.8 -9.4 18.6 32.9 -27.8
  Aluminum ($ per metric ton) -1.2 -8.9 -3.0 -5.2 26.0 13.0 -19.2
  Copper Scrap (cents per pound) 0.6 -13.4 -11.8 -7.5 29.3 17.3 -27.0
  Steel Scrap ($ per ton) -5.8 -10.5 -10.4 5.6 16.8 74.5 -53.8
 Crude Oil & Benzene 0.7 1.6 2.3 13.8 8.1 20.4 -19.4
  Crude Oil (WTI, $ per Barrel) 4.5 6.7 9.6 39.4 10.9 44.3 -35.8
 Miscellaneous 0.2 -11.7 -9.2 -6.7 -0.5 21.7 -18.0
  Framing Lumber ($ per 1000 board ft.) 0.0 -22.8 -12.8 4.8 20.0 12.9 -16.4
  Natural Rubber (cents per pound) 1.2 -2.2 -7.8 -11.1 -29.6 89.4 -22.5
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