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Economy in Brief

FIBER: Industrial Commodity Prices Weaken
by Tom Moeller  May 6, 2019

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) fell 1.3% during the last four weeks and was 11.6% below the prior year's level. Declines y/y were notable for metals and lumber.

Metals prices declined 3.7% over the last month led by the same 3.7% m/m fall in the cost of aluminum. Steel scrap prices were off 3.1% during the last four weeks. Zinc prices fell 3.0% last month and they remained 6.5% lower y/y. Copper scrap prices also weakened 1.6% m/m. Prices in the miscellaneous group fell 1.6% m/m led by a 2.8% weakening in framing lumber prices. Structural panel prices fell 3.5% m/m and were down roughly one-third versus last year. Working the other way, the cost of natural rubber rose 1.4% last month and 5.8% y/y. A 2.0% m/m gain in the crude oil & benzene category was led by a 1.9% rise in crude oil prices to $63.05 per barrel, up from the $45.02 low at the end of last year. Despite the increase, crude prices remained down versus the $75.05 early-October peak. Prices for the petro-chemical benzene increased 6.8% during the last month, but they remained one-quarter below the year-ago level. Prices in the textile group slipped 0.8% m/m and were down modestly y/y. Cotton prices also fell 0.8% m/m while burlap prices eased 0.9% m/m (-4.1% y/y).

Recent declines in industrial commodity prices accompanied a fall in factory sector output during each of the last three months. Improvement may be forthcoming as the consensus forecast from the National Association for Business Economics (NABE) calls for a 2.8% rise in industrial output during all of 2019 and a 1.7% gain next year. During the last ten years, there has been a 52% 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.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2018 2017 2016
All Items -1.3 2.1 -1.5 -11.6 -12.0 6.7 19.2
 Textiles -0.8 0.4 -0.4 -2.3 -2.8 3.0 2.8
  Cotton (cents per pound) -0.8 2.0 -3.9 -11.2 -9.2 9.8 10.2
 Metals -3.7 0.6 -0.3 -11.9 -12.2 18.6 32.9
  Aluminum ($ per metric ton) -3.7 -3.2 -7.8 -20.4 -12.7 26.0 13.0
  Copper Scrap (cents per pound) -1.6 5.6 3.7 -6.4 -16.1 29.3 17.3
  Steel Scrap ($ per ton) -3.1 6.4 -8.2 -12.9 2.3 16.8 74.5
 Crude Oil & Benzene 2.0 9.2 -6.3 -7.9 -20.0 8.1 20.4
  Crude Oil (WTI, $ per Barrel) 1.9 17.9 -4.4 -7.4 -24.4 10.9 44.3
 Miscellaneous -1.6 1.6 -1.2 -19.9 -14.8 -0.5 21.7
  Framing Lumber ($ per 1000 board ft.) -2.8 4.2 1.2 -30.8 -23.1 20.0 12.9
  Natural Rubber (cents per pound) 1.4 7.6 19.8 5.8 -4.1 -29.6 89.4
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