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Economy in Brief

FIBER: Industrial Commodity Prices Are Mixed
by Tom Moeller  September 9, 2019

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) was little changed during the last four weeks. The price index was down 11.8% y/y and remained at the lowest level since June 2016.

Prices amongst product categories were decidedly mixed. The cost of metals was off 2.1% (-9.7% y/y) over the last month, reflecting a 10.2% decline (-18.8% y/y) in steel scrap prices. Zinc prices fell 1.7% in the last four weeks (-7.9% y/y) while copper scrap prices slipped 0.9% last month (-4.4% y/y). The cost of aluminum eased 0.5% (-15.9% y/y) but lead prices increased 1.7% (-1.8% y/y). Improving were prices in the crude oil & benzene category as they rose 1.4%. Prices for the petro-chemical benzene increased 1.8% during the last month (-19.3% y/y). Crude oil prices improved to $55.33 per barrel by the end of the month but remained below their $75.05 early-October peak. Prices in the textile group edged 0.1% higher (-6.6% y/y) as cotton prices strengthened 2.1%. They remained down roughly one-third y/y. Burlap prices declined 2.6% m/m and -10.2% y/y. Also rising were prices in the miscellaneous group by 1.5% during the last four weeks (-17.4% y/y). Natural rubber prices rose 5.9% and were 6.5% higher y/y. To the downside was the cost of framing lumber which eased 0.6% (-24.1% y/y) during the last four weeks. Prices for structural panels fell 2.1% m/m and remained down nearly one-third y/y.

Economic activity will do little to support commodity prices anytime soon. Recessions outside of the U.S. are taking shape and U.S. output growth is projected to slow. Industrial production grew 4.0% last year. The consensus forecast from the National Association for Business Economics (NABE) calls for a lessened 2.4% rise 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 -3.0 -7.0 -11.8 -12.0 6.7 19.2
 Textiles 0.1 -3.5 -4.6 -6.6 -2.8 3.0 2.8
  Cotton (cents per pound) 2.1 -14.1 -19.9 -30.3 -9.2 9.8 10.2
 Metals -2.1 -5.3 -13.8 -9.7 -12.2 18.6 32.9
  Aluminum ($ per metric ton) -0.5 -1.5 -7.1 -15.9 -12.7 26.0 13.0
  Copper Scrap (cents per pound) -0.9 -2.7 -13.1 -4.4 -16.1 29.3 17.3
  Steel Scrap ($ per ton) -10.2 -12.8 -18.6 -18.8 2.3 16.8 74.5
 Crude Oil & Benzene 1.4 2.8 2.9 -11.6 -20.0 8.1 20.4
  Crude Oil (WTI, $ per Barrel) 2.9 4.9 -1.1 -19.5 -24.4 10.9 44.3
 Miscellaneous  1.5 -3.0 -7.2 -17.4 -14.8 -0.5 21.7
  Framing Lumber ($ per 1000 board ft.) -0.6 5.8 -7.3 -24.1 -23.1 20.0 12.9
  Natural Rubber (cents per pound) 5.9 -16.7 -9.4 6.5 -4.1 -29.6 89.4
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