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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
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 |