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Economy in Brief

FIBER: Industrial Commodity Price Rebound Led by Petroleum
by Tom Moeller  May 22, 2020

• Oil prices rise as lockdown eases.

• Metals prices improve.

• Plywood prices surge.

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) jumped 9.4% during the four weeks ended today. The price index has rebounded to the highest level in two months after falling to an 11-year low. Prices remained 13.3% lower than twelve months earlier.

Strength in the crude oil & benzene group led the price rebound, up 57.2% in the last four weeks. WTI crude oil prices surged to $32.43 per barrel, up from $11.66 four weeks earlier. Prices remained down from a high of $61.92 in the first week of January. Prices of the petro-chemical benzene rose 7.4% in the last four weeks (-55.3% y/y). Excluding crude oil, industrial commodity prices rose 1.9% during the last four weeks but were off 10.6% over the last year.

Prices in the miscellaneous group increased 2.1% in the last month as the cost of tallow (used for food preparation) surged 20.7% (25.0% y/y). Framing lumber prices rose 8.0% but the cost of plywood held steady (-7.7 y/y). Natural rubber prices also were unchanged over the last month. Prices in the metals group improved 2.0% during the last four weeks as the cost of copper scrap rose 3.7% and zinc prices increased 5.0% (-26.4% y/y). Steel scrap prices improved 2.0% but aluminum prices eased 0.5%. Lead prices slipped 0.8% (-9.1% y/y) in the last four weeks. Rising by 1.3% were prices in the textile group. Cotton prices surged 8.3% but the cost of burlap (used for sacks, bags & gardening) held steady (1.2% y/y).

The deepening factory sector recession likely will keep industrial materials prices weak. Industrial output plummeted 13.7% in April (-18.0% y/y) as the effects of the coronavirus spread. During the last ten years, there has been a 54% correlation between the y/y change in industrial commodity prices and the y/y change in factory sector production.

Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.

An Unemployment Crisis after the Onset of COVID-19 from the Federal Reserve Bank of San Francisco is available here.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2019 2018 2017
All Items 9.4 -11.8 -9.8 -13.3 1.1 -12.0 6.7
  Excluding Crude Oil 1.9 -9.8 -7.2 -10.6 -0.6 -11.1 4.9
 Textiles 1.3 -2.4 -0.5 -2.0 -1.6 -2.8 3.0
  Cotton (cents per pound) 8.3 -15.4 -10.7 -12.5 -6.6 -9.2 9.8
 Metals 2.0 -9.7 -11.5 -16.7 -4.3 -12.2 18.6
  Aluminum ($ per metric ton) -0.5 -13.5 -16.5 -17.7 -6.5 -12.7 26.0
  Copper Scrap (cents per pound) 3.7 -8.0 -9.2 -11.2 3.5 -16.1 29.3
  Steel Scrap ($ per ton) 2.0 -8.2 -4.6 -16.6 -0.8 2.3 16.8
 Crude Oil & Benzene 57.2 -31.2 -31.3 -32.8 20.2 -20.0 8.1
  Crude Oil (WTI, $ per Barrel) 178.1 -38.5 -43.2 -47.5 35.5 -24.4 10.9
 Miscellaneous 2.1 -10.2 -3.5 -8.3 -0.0 -14.8 -0.5
  Framing Lumber ($ per 1000 board ft.) 8.0 -22.6 -13.2 1.2 22.6 -23.1 20.0
  Natural Rubber (cents per pound) 0.0 -6.8 -3.1 -16.7 10.7 -4.1 -29.6
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