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Economy in Brief

FIBER: Industrial Commodity Prices Rise
by Tom Moeller  November 11, 2019

Recent improvement in factory production lent some life to pricing power in the sector. The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 2.2% during the last four weeks and 1.6% over the last three months. Nevertheless, the price index was down 5.5% y/y.

The degree of four-week price improvement varied greatly amongst product groupings. Prices in the metals grouping showed the most strength with a 4.8% rise over the last month as the cost of steel scrap surged 11.5%. Zinc prices also exhibited life with an 9.5% rise in four weeks (-0.2% y/y) and the cost of aluminum improved 4.5%. Copper scrap prices rose 4.0% last month, but lead prices eased 0.3% (+11.0% y/y). Prices in the miscellaneous grouping rose 1.9% as the cost of framing lumber jumped 7.7% and prices for natural rubber prices improved 4.4%. Structural panel prices held steady last month, but were down a lessened 15.2% y/y. Prices in the textile group improved 0.7% during the last month as cotton prices strengthened 3.9% m/m. Burlap prices improved 0.6% in the last month (-7.6% y/y). Prices in the crude oil & benzene category rose 0.6% m/m as crude oil prices rose to $56.63 per barrel by the end of the month. Nevertheless, they remained well below the early-October peak of $75.05. A 9.4% four-week decline (-20.4% y/y) in the cost of petro-chemical benzene offset this strength.

Commodity prices could remain weak over the short term. U.S. factory output growth is projected to slow and recessions abroad are continuing. The consensus forecast from the National Association for Business Economics (NABE) calls for a modest 0.9% rise in industrial 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.

Why Climate Change Matters for Monetary Policy and Financial Stability from Fed Governor Lael Brainard can be found here.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2018 2017 2016
All Items 2.2 1.6 -3.7 -5.5 -12.0 6.7 19.2
 Textiles 0.7 1.5 -2.8 -4.0 -2.8 3.0 2.8
  Cotton (cents per pound) 3.9 14.3 -9.7 -18.4 -9.2 9.8 10.2
 Metals 4.8 2.2 -3.9 -6.6 -12.2 18.6 32.9
  Aluminum ($ per metric ton) 4.5 3.5 1.6 -8.2 -12.7 26.0 13.0
  Copper Scrap (cents per pound) 4.0 3.2 -4.5 -5.4 -16.1 29.3 17.3
  Steel Scrap ($ per ton) 11.5 -8.7 -10.7 -21.8 2.3 16.8 74.5
 Crude Oil & Benzene 0.6 0.9 -2.9 -7.5 -20.0 8.1 20.4
  Crude Oil (WTI, $ per Barrel) 7.0 4.9 -8.6 -8.7 -24.4 10.9 44.3
 Miscellaneous 1.9 1.4 -4.4 -4.7 -14.8 -0.5 21.7
  Framing Lumber ($ per 1000 board ft.) 7.7 13.6 11.3 16.6 -23.1 20.0 12.9
  Natural Rubber (cents per pound) 4.4 0.8 -13.8 4.9 -4.1 -29.6 89.4
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