Last week's report that factory sector output fell again in April helps shed light on the recent weakness in industrial commodity prices. The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) fell 3.0% during the last four weeks, weakened 1.1% during the last three months and dove 14.2% below the prior year's level. Declines were registered across product categories.

Metals prices fell 5.7% over the last month, reflecting a 6.6% decline in steel scrap prices. Zinc prices also weakened 6.9% during that period and were 10.4% lower y/y. Copper scrap prices declined 6.4% m/m, while aluminum pries eased 2.7%. Lead prices also dropped sharply. Prices in the textile group fell 2.6% during the last four weeks paced by a 15.2% decline in cotton prices. Some of that extreme weakness was tempered by a just a slight m/m easing in burlap prices, which were down 3.9% y/y. Prices in the miscellaneous group were off 1.7% m/m led by a 6.2% drop in hide prices. They were down by more than one-third y/y. Structural panel prices also declined 2.2% m/m and by 35.2% y/y. Offsetting some of this recent weakness was a modest m/m rise in natural rubber costs and stability in framing lumber prices. A 1.2% m/m price decline in the crude oil & benzene category was led by a 2.6% drop in crude oil prices to $62.22 per barrel, which have since stabilized. Prices remain above the $45.02 low at the end of last year. Despite the latest increase, crude oil prices remained down versus the $75.05 early-October peak. Prices for the petro-chemical benzene declined 1.0% during the last month, and they remained one-quarter below the year-ago level.

Improvement in industrial commodity prices 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.