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Economy in Brief

FIBER: Industrial Commodity Prices Continue to Increase
by Tom Moeller  August 19, 2020

• Crude oil prices show further strength.

• Metals and lumber prices jump.

The upturn in factory sector activity continues to support industrial materials prices. A 3.3% jump in July industrial output helped lift the Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) by 5.1% during the last four weeks. The price index was at the highest level since the third week of February. Prices have risen 23.2% from the late-April low and increased 1.9% y/y.

Prices in the crude oil & benzene group were strong, up 87.3% since late-April. WTI crude oil prices improved to $42.02 per barrel, up from $15.66 early in May. Prices remained down, however, from a high of $61.92 in the first week of January. Prices of the petro-chemical benzene rose 8.3% in the last four weeks but remained down by roughly one-third y/y. Excluding crude oil, industrial commodity prices rose 5.2% during the last four weeks and increased 3.6% during the last year, up 15.1% since early-April.

Prices in the metals group increased 4.9% during the last four weeks as the cost of steel scrap rose 10.9%. The price of zinc increased 8.6% in four weeks and 5.1% y/y, while lead prices rose 4.0% (-7.2% y/y). Aluminum prices strengthened 6.0% during the last four weeks but copper scrap prices fell 1.0%. Prices in the textile group edged 0.2% higher in four weeks as the cost of burlap, used for sacks, bags and gardening, rose 5.6% (17.3% y/y). Cotton prices fell 2.5% during the same period.

Also strengthening were prices in the miscellaneous group by 10.6% in the last month as framing lumber prices surged by slightly less than one-third and nearly doubled y/y. Natural rubber prices surged 10.5% over the last month and 18.9% during the last year. Hide prices rose 4.0% (-23.0% y/y) during the last month. Plywood prices have been unchanged since December 2019 (-1.8% y/y).

Further strength in industrial output should lead to further improvement in industrial commodity prices. Expectations from the National Association for Business Economics call for a 2.8% rise in output next year following a 12.0% decline this year.

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

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2019 2018 2017
All Items 5.1 15.2 0.4 1.9 1.1 -12.0 6.7
  Excluding Crude Oil 5.2 12.7 1.5 3.6 -0.6 -11.1 4.9
 Textiles 0.2 2.3 -0.5 2.7 -1.6 -2.8 3.0
  Cotton (cents per pound) -2.5 9.1 -9.5 6.4 -6.6 -9.2 9.8
 Metals 4.9 18.6 7.6 2.3 -4.3 -12.2 18.6
  Aluminum ($ per metric ton) 6.0 20.7 3.0 0.2 -6.5 -12.7 26.0
  Copper Scrap (cents per pound) -1.0 22.5 12.1 11.6 3.5 -16.1 29.3
  Steel Scrap ($ per ton) 10.9 15.2 7.5 -0.4 -0.8 2.3 16.8
 Crude Oil & Benzene 3.0 31.8 -16.3 -17.0 20.2 -20.0 8.1
  Crude Oil (WTI, $ per Barrel) 3.9 66.2 -17.1 -23.7 35.5 -24.4 10.9
 Miscellaneous 10.6 16.2 3.8 10.9 -0.0 -14.8 -0.5
  Framing Lumber ($ per 1000 board ft.) 30.2 102.1 52.8 96.2 22.6 -23.1 20.0
  Natural Rubber (cents per pound) 10.5 20.9 16.4 18.9 10.7 -4.1 -29.6
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