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Economy in Brief

FIBER: Industrial Commodity Prices Continue to Improve
by Tom Moeller  June 19, 2020

• Prices post broad-based increases.

• Crude oil prices lead the upturn.

• Metals prices firm.

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 2.8% during the four weeks ended today. The price index has rebounded to the highest level since the second week of March. Nevertheless, prices remained 9.7% lower than twelve months ago.

Strength in the crude oil & benzene group led the price increase in the last four weeks with a 15.4% rise. WTI crude oil prices improved to $37.42 per barrel, up from $25.28 in the middle of May. Prices remained down, however, from a high of $61.92 in the first week of January. Prices of the petro-chemical benzene rose 24.2% in the last four weeks but remained down by roughly one-half y/y. Excluding crude oil, industrial commodity prices rose 2.0% during the last four weeks but fell 8.2% during the last year.

Prices in the metals group improved 6.8% during the last four weeks as the cost of copper scrap rose 8.6% and lead prices increased 7.9% (-7.0% y/y). Aluminum prices strengthened 7.7% while steel scrap prices gained 5.3%. The price of zinc edged 0.2% higher in four weeks but fell 22.4% y/y. Prices in the textile group posted a modest 0.8% increase but cotton prices strengthened 3.0%. This gain was accompanied by a 2.6% rise (3.7% y/y) in the cost of burlap which is used for sacks, bags and gardening.

Working lower were prices in the miscellaneous group which were off 2.3% in the last month. The cost of tallow (used for food preparation) fell 29.1% in four weeks (-17.3% y/y) and reversed its earlier increases. Framing lumber prices rose 4.0% in four weeks but the cost of plywood held steady (-2.4% y/y). Natural rubber prices increased 9.8% over the last month.

Improved activity in the factory sector is an underpinning of the rise in industrial materials prices. Industrial output increased 3.8% in May (-16.5% y/y) following a 15.5% April decline. 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.

COVID-19 Stuns U.S. and Tenth District Economies, but Both Show Signs of Stabilization from the Federal Reserve Bank of Kansas City is available here.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2019 2018 2017
All Items 2.8 0.9 -9.4 -9.7 1.1 -12.0 6.7
  Excluding Crude Oil 2.0 -0.9 -7.2 -8.2 -0.6 -11.1 4.9
 Textiles 0.8 1.4 -0.6 -1.0 -1.6 -2.8 3.0
  Cotton (cents per pound) 3.0 5.5 -11.2 -8.7 -6.6 -9.2 9.8
 Metals 6.8 4.8 -8.2 -10.0 -4.3 -12.2 18.6
  Aluminum ($ per metric ton) 7.7 -3.8 -10.9 -10.0 -6.5 -12.7 26.0
  Copper Scrap (cents per pound) 8.6 11.2 -6.6 -1.8 3.5 -16.1 29.3
  Steel Scrap ($ per ton) 5.3 -1.4 -11.3 -9.8 -0.8 2.3 16.8
 Crude Oil & Benzene 10.1 4.8 -27.3 -25.3 20.2 -20.0 8.1
  Crude Oil (WTI, $ per Barrel) 15.4 36.8 -38.2 -30.6 35.5 -24.4 10.9
 Miscellaneous -2.3 -4.4 -7.7 -8.0 -0.0 -14.8 -0.5
  Framing Lumber ($ per 1000 board ft.) 4.0 16.0 -9.5 11.3 22.6 -23.1 20.0
  Natural Rubber (cents per pound) 9.8 3.2 -0.3 -18.6 10.7 -4.1 -29.6
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