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Economy in Brief

FIBER: Industrial Commodity Prices Stabilize
by Tom Moeller  July 19, 2019

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) was fairly steady during the last four weeks, rising 0.3% as activity in the industrial sector improved. The price index declined, however, by 4.1% during the last three months and 12.0% y/y. Price movement amongst product categories continued to vary.

Showing strength were prices in the crude oil & benzene category which rose 1.8% during the last four weeks. Crude oil prices rose to $57.75 per barrel. They remained below the $65.28 high in late-April and the $75.05 early-October peak. Prices for the petro-chemical benzene fell 4.1% during the last month, and fell 5.5% y/y. Prices in the miscellaneous group rose 1.1% during the last four weeks as prices for structural panels improved 3.5%, but remained down by one-third y/y. Natural rubber also declined 13.9% over the last four weeks. Offsetting these declines was a 10.7% one-month rise in the cost of framing lumber. Metals prices edged 0.5% higher over the last month reflecting a 4.1% increase in aluminum prices. Steel scrap prices improved 2.2% and prices for copper scrap rose 1.7% during the last month. Lead prices also increased 5.0% (-2.4% y/y) but zinc prices fell 4.7% (-4.1% y/y). Moving 1.5% lower were prices in the textile group during the last four weeks as cotton prices fell 7.3%. Burlap prices also declined 2.8% (-3.5% y/y).

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 0.3 -4.1 0.6 -12.0 -12.0 6.7 19.2
 Textiles -1.5 -4.2 -3.3 -6.7 -2.8 3.0 2.8
  Cotton (cents per pound) -7.3 -22.4 -18.1 -33.9 -9.2 9.8 10.2
 Metals 0.5 -6.8 -0.8 -7.9 -12.2 18.6 32.9
  Aluminum ($ per metric ton) 4.1 -1.4 0.3 -13.1 -12.7 26.0 13.0
  Copper Scrap (cents per pound) 1.7 -8.0 0.9 -2.4 -16.1 29.3 17.3
  Steel Scrap ($ per ton) 2.2 -5.0 5.2 -12.9 2.3 16.8 74.5
 Crude Oil & Benzene 1.8 -0.0 12.1 -7.5 -20.0 8.1 20.4
  Crude Oil (WTI, $ per Barrel) 7.2 -9.6 11.4 -16.2 -24.4 10.9 44.3
 Miscellaneous 1.1 -0.3 -0.0 -20.9 -14.8 -0.5 21.7
  Framing Lumber ($ per 1000 board ft.) 10.7 2.3 10.4 -32.1 -23.1 20.0 12.9
  Natural Rubber (cents per pound) -13.9 -4.5 8.9 17.5 -4.1 -29.6 89.4
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