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Economy in Brief

FIBER: Industrial Commodity Prices Are Fairly Steady
by Tom Moeller  October 21, 2019

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 0.7% during the last four weeks. An uptick last week was part of an irregular sideways path in place since early August. Despite this stability, the price index was down 9.9% y/y and remained near the lowest level since spring 2016.

Weakness in the Crude Oil & Benzene category paced the price shortfall last month with a 4.5% decline. Crude oil prices fell 11.2% to $53.55, though benzene prices eased just 0.8% during the last four weeks (-14.2% y/y). The FIBER price index excluding crude oil was unchanged during the last four weeks (-9.0% y/y). Prices in the Miscellaneous grouping slipped 0.6% during the last month, led by a 5.5% drop in natural rubber prices. That was offset by a last month's 1.6% improvement in framing lumber prices and stability (-23.5% y/y) in the price of structural panels. Metals costs improved 0.3% during the last four weeks lead by zinc prices which rose 4.0% (-8.3% y/y) and lead prices which improved 4.1% (5.9% y/y). Prices for other metals weakened during the last four weeks as aluminum prices declined 2.8%. Copper scrap prices fell 1.3% and steel scrap prices were off 0.9%. To the upside, prices in the Textile group rose 0.4% as part of a recently strengthened trend. Cotton prices increased 5.5% last month, but burlap prices declined 4.1% m/m and 13.6% y/y. 

Economic activity will do little to support commodity prices over the short term. Recessions outside of the U.S. are continuing and U.S. factory output growth is projected to slow. Industrial production grew 4.0% last year. The consensus forecast from the National Association for Business Economics (NABE) recently was lowered to a sluggish 0.9% rise in production both this year and next. During the last ten years, there has been a 71% 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 -0.7 -3.2 -7.1 -9.9 -12.0 6.7 19.2
 Textiles 0.4 0.2 -4.0 -4.6 -2.8 3.0 2.8
  Cotton (cents per pound) 5.5 8.8 -15.6 -17.9 -9.2 9.8 10.2
 Metals 0.3 -5.0 -11.4 -11.3 -12.2 18.6 32.9
  Aluminum ($ per metric ton) -2.8 -5.7 -7.1 -15.5 -12.7 26.0 13.0
  Copper Scrap (cents per pound) -1.3 -3.8 -11.5 -8.3 -16.1 29.3 17.3
  Steel Scrap ($ per ton) -0.9 -19.6 -23.6 -26.9 2.3 16.8 74.5
 Crude Oil & Benzene -4.5 -4.5 -4.5 -12.5 -20.0 8.1 20.4
  Crude Oil (WTI, $ per Barrel) -11.2 -7.3 -16.2 -24.3 -24.4 10.9 44.3
 Miscellaneous -0.6 -3.7 -6.8 -11.5 -14.8 -0.5 21.7
  Framing Lumber ($ per 1000 board ft.) 1.6 3.3 5.7 0.0 -23.1 20.0 12.9
  Natural Rubber (cents per pound) -5.5 -15.3 -15.3 -5.0 -4.1 -29.6 89.4
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