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Economy in Brief

FIBER: Industrial Commodity Prices Exhibit Broad-based Weakness
by Tom Moeller  January 14, 2019

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) has been weakening since late-June when the index reached its peak. During the last month alone, it's down 1.9% and over the last year, it's fallen 12.3%.

A 17.4% y/y decline in prices in the crude oil & benzene category paced last year's decline. Crude oil prices fell to $45.02 per barrel by the end of the year, down from their $75.05 peak early in October. Last week, prices recovered to an average $50.22 per barrel. Prices for the petro-chemical benzene collapsed to roughly 180 cents per gallon from 280 cents in November. Prices in the miscellaneous group fell 14.2% y/y as of last week, led by a one-quarter decline in framing lumber prices. Structural panel prices were off 16.5% y/y. Earlier declines in rubber prices have stabilized, and they've risen 4.6% y/y. Metals prices posted a 15.1% y/y decline as of last week, paced by lead and zinc prices which fell 25.0% y/y and 26.0% y/y, respectively. And they have continued to soften. Copper scrap prices were down 17.0% y/y. Aluminum prices also weakened during the last year, off 14.8% y/y, and they too continue to soften. Steel scrap prices declined a lesser 2.8% y/y, but they've weakened sharply of late. In the textile group, prices fell 3.3% over the last year, led by an 11.3% y/y drop in cotton prices. Burlap prices declined 12.3% y/y, but most recently they have risen.

Weakness in industrial commodity prices occurred despite improvement in the factory sector. Overall manufacturing sector output has been fairly steady during the last few months and has risen 1.9% y/y. The consensus forecast from the National Association for Business Economics (NABE) calls for a 2.7% rise in industrial output during all of 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.

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

Oil and Gas Sector Growth Stalls amid Sharp Oil Price Decline from the Federal Reserve Bank of Dallas is available here.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2018 2017 2016
All Items -1.9 -8.4 -14.0 -12.3 -12.0 6.7 19.2
 Textiles -1.4 -1.4 -3.3 -3.3 -2.8 3.0 2.8
  Cotton (cents per pound) -9.6 -6.6 -18.2 -11.3 -9.2 9.8 10.2
 Metals -3.2 -5.0 -9.0 -15.1 -12.2 18.6 32.9
  Aluminum ($ per metric ton) -4.7 -10.1 -12.7 -14.8 -12.7 26.0 13.0
  Copper Scrap (cents per pound) -4.2 -4.9 -5.9 -17.0 -16.1 29.3 17.3
  Steel Scrap ($ per ton) -6.2 -13.1 -15.8 -2.8 2.3 16.8 74.5
 Crude Oil & Benzene -4.1 -20.6 -20.2 -17.4 -20.0 8.1 20.4
  Crude Oil (WTI, $ per Barrel) -3.7 -31.5 -30.8 -20.1 -24.4 10.9 44.3
 Miscellaneous -0.1 -10.4 -22.7 -14.2 -14.8 -0.5 21.7
  Framing Lumber ($ per 1000 board ft.) -3.2 -15.4 -39.3 -24.5 -23.1 20.0 12.9
  Natural Rubber (cents per pound) 9.3 2.6 5.1 4.6 -4.1 -29.6 89.4
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