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Economy in Brief

FIBER: Industrial Commodity Prices Continue to Strengthen
by Tom Moeller  January 11, 2021

• Production gains lift prices.

• Commodity price strength remains broad-based.

Strength in industrial output is continuing. Industrial production rose during each of the seven months ended November, up 20.5% during that period. At the same time, the Industrial Materials Price Index, from the Foundation for International Business and Economic Research (FIBER), has increased by roughly one-quarter.

Price strength in the metals group has continued with a 32.5% six-month rise and a 4.8% gain during the last four weeks. Steel scrap prices jumped 80.4% in six months and zinc prices rose by roughly one-third during that period. The price of copper scrap rose 29.0% in six months while aluminum prices rose one-quarter over that period. Lead prices are close behind with a 13.1% six-month rise.

Prices in the crude oil & benzene group rose 19.5% during the last six months and 2.0% during the last four weeks. A 22.5% half-year rise in crude oil prices to $49.52 per barrel powered the increase. Excluding crude oil, industrial commodity prices have risen 23.5% in six months and 3.5% in the last four weeks. Prices of the petro-chemical benzene rose 69.8% in the last six months.

These gains have been accompanied by a 34.8% rise in prices in the miscellaneous group during the last six months. Framing lumber costs nearly doubled during the period. This increase was accompanied by a 39.2% half-year rise in natural rubber prices, though they declined during the last four weeks. Plywood prices have been unchanged since December 2019.

Prices in the textile group improved 4.7% in the last six months as cotton prices rose 25.4%. The cost of burlap, used for sacks, bags and gardening improved 10.3% in six months and 1.4% in the last month alone.

Continued recovery in industrial output will help support commodity prices. Forecasts from the National Association for Business Economics call for a 3.4% four-quarter rise in real GDP in 2021, following a 2.6% decline this year.

The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.

FIBER Industrial Materials Price Index (%) 4-Week 3-Month 6-Month 12-Month 2020 2019 2018
All Items 3.8 14.5 23.5 14.6 13.5 1.1 -12.0
  Excluding Crude Oil 3.5 13.8 23.5 17.0 16.0 -0.6 -11.1
 Textiles 1.6 3.8 4.7 4.3 3.9 -1.6 -2.8
  Cotton (cents per pound) 9.8 22.7 25.4 14.5 11.6 -6.6 -9.2
 Metals 4.8 24.6 32.5 24.0 20.4 -4.3 -12.2
  Aluminum ($ per metric ton) 0.3 15.5 25.1 13.6 13.1 -6.5 -12.7
  Copper Scrap (cents per pound) 3.4 22.0 29.0 29.8 26.9 3.5 -16.1
  Steel Scrap ($ per ton) 18.7 64.4 80.4 56.2 43.6 -0.8 2.3
 Crude Oil & Benzene 2.0 20.9 19.5 -9.3 -9.7 20.2 -20.0
  Crude Oil (WTI, $ per Barrel) 7.5 25.7 22.5 -19.9 -21.4 35.5 -24.4
 Miscellaneous 5.4 12.2 34.8 28.8 29.1 -0.0 -14.8
  Framing Lumber ($ per 1000 board ft.) 21.3 23.0 92.0 123.5 113.5 22.6 -23.1
  Natural Rubber (cents per pound) -9.0 11.2 39.2 38.7 48.6 10.7 -4.1
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