• 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.

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