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Economy in Brief

FIBER: Industrial Commodity Prices Are Mixed
by Tom Moeller  July 8, 2019

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) was little changed during the last four weeks. It declined, however, by 4.6% during the last three months as activity in the manufacturing sector weakened. Price movement amongst product categories varied greatly.

Showing strength were prices in the crude oil & benzene category which rose 5.5% during the last month. Crude oil prices increased modestly to $57.73 per barrel. Despite the rise, prices remained below the $65.28 high in late-April and lower than the $75.05 early-October peak. Prices for the petro-chemical benzene increased 11.7% during the last month but fell 11.7% y/y. Metals prices nudged 0.2% higher over the last month, reflecting a 2.4% increase in copper scrap prices. Steel scrap prices also rose 1.2% during the last month and the cost of aluminum gained 0.7%. Lead prices also improved 2.7% (-21.0% y/y). Offsetting these increases was a 4.6% m/m decline in the cost of zinc (-12.6% y/y). Prices in the textile group fell 1.2% during the last four weeks as cotton prices backpedaled 4.8%. Burlap prices also declined 3.5% (-1.3% y/y). Prices in the miscellaneous group were off 1.5% m/m as prices for structural panels declined 4.0% m/m and 39.6% y/y. Offsetting this weakness was a 6.2% rise in framing lumber costs and a 3.6% increase in the cost of natural rubber.

Improvement in industrial commodity prices may be forthcoming. The consensus forecast from the National Association for Business Economics (NABE) calls for a 2.4% rise in industrial output during all of 2019 and a 1.8% 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 0.1 -4.6 1.6 -14.2 -12.0 6.7 19.2
 Textiles -1.2 -3.0 -1.6 -4.6 -2.8 3.0 2.8
  Cotton (cents per pound) -4.8 -15.7 -9.8 -24.8 -9.2 9.8 10.2
 Metals 0.2 -8.5 -1.2 -12.7 -12.2 18.6 32.9
  Aluminum ($ per metric ton) 0.7 -5.7 -4.8 -18.0 -12.7 26.0 13.0
  Copper Scrap (cents per pound) 2.4 -8.1 0.6 -9.4 -16.1 29.3 17.3
  Steel Scrap ($ per ton) 1.2 -4.5 4.7 -9.0 2.3 16.8 74.5
 Crude Oil & Benzene 5.5 1.3 16.4 -11.0 -20.0 8.1 20.4
  Crude Oil (WTI, $ per Barrel) 9.0 -6.7 25.6 -21.9 -24.4 10.9 44.3
 Miscellaneous -1.5 -4.9 0.2 -23.8 -14.8 -0.5 21.7
  Framing Lumber ($ per 1000 board ft.) 6.2 -4.2 3.9 -36.9 -23.1 20.0 12.9
  Natural Rubber (cents per pound) 3.6 13.7 32.1 32.3 -4.1 -29.6 89.4
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