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Economy in Brief

FIBER: Industrial Commodity Prices Trend Sideways
by Tom Moeller  November 22, 2019

Minimal pricing power in the factory sector continues. The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 0.5% during the last four weeks and 0.6% over the last three months. The price index was down 5.6% y/y.

Prices in the metals grouping actually showed strength with a 2.2% rise over the last month as the cost of steel scrap jumped 9.8%. Zinc prices also rose 2.6% in the last four weeks (-2.8% y/y) and the cost of aluminum improved 4.3%. Copper scrap prices rose 2.3% last month, but lead prices declined 4.2% (+7.5% y/y). Prices in the miscellaneous grouping fell 1.1%. The cost of framing lumber improved 0.8% and prices for natural rubber rose 3.4%. Structural panel costs continued to move sideways and were down 15.0% y/y. Prices in the textile group improved 0.3% during the last month as cotton prices rose 0.2% m/m. Burlap prices improved 2.2% last month (-6.5% y/y). Prices in the crude oil & benzene category increased 1.4% m/m as crude oil prices rose to $57.08 per barrel. Nevertheless, they remained well below the early-October peak of $75.05. The cost of the petro-chemical benzene fell 5.1% in the last four weeks (-17.1% y/y).

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.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2018 2017 2016
All Items 0.5 0.6 -3.7 -5.6 -12.0 6.7 19.2
 Textiles 0.3 1.5 -1.1 -3.4 -2.8 3.0 2.8
  Cotton (cents per pound) 0.2 13.5 -0.2 -16.0 -9.2 9.8 10.2
 Metals 2.2 0.5 -4.0 -7.3 -12.2 18.6 32.9
  Aluminum ($ per metric ton) 4.3 2.5 -0.4 -7.7 -12.7 26.0 13.0
  Copper Scrap (cents per pound) 2.3 2.5 -3.2 -4.2 -16.1 29.3 17.3
  Steel Scrap ($ per ton) 9.8 -9.2 -10.2 -20.9 2.3 16.8 74.5
 Crude Oil & Benzene 1.4 1.2 -2.0 -3.8 -20.0 8.1 20.4
  Crude Oil (WTI, $ per Barrel) 6.6 3.6 -8.3 -0.8 -24.4 10.9 44.3
 Miscellaneous -1.1 -0.5 -6.2 -6.6 -14.8 -0.5 21.7
  Framing Lumber ($ per 1000 board ft.) 0.8 9.0 6.5 13.3 -23.1 20.0 12.9
  Natural Rubber (cents per pound) 3.4 0.6 -13.2 8.5 -4.1 -29.6 89.4
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