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Economy in Brief

FIBER: Industrial Commodity Price Index Declines
by Tom Moeller  July 12, 2021

• Framing lumber price weakness is pronounced.

• Crude oil prices strengthen.

• Metals prices improve.

The Industrial Materials Price Index, from the Foundation for International Business and Economic Research (FIBER), fell 1.9% during the four weeks ended July 9. On a weekly basis, prices edged 0.2% higher following sharp declines during the last eight weeks. Despite the weakness, prices were up 36.6% y/y as manufacturing sector activity remained firm.

Prices in the miscellaneous group led the decline and fell 8.7% during the last four weeks. Framing lumber prices weakened roughly one-third, but they remained 65.0% higher y/y as home building remained strong. Plywood prices were unchanged. Natural rubber prices weakened 13.6% in the last four weeks.

Offsetting this decline, prices in the crude oil & benzene group rose 3.8% in four weeks. Prices for the petro-chemical benzene increased 8.8%, up 136.6% y/y. Working 5.9% higher in the last four weeks were crude oil prices to $73.73 per barrel, up from $47.93 at the end of last year. Excluding crude oil, industrial commodity prices fell 2.4% in the last four weeks.

Metals prices improved 0.9% during the last four weeks paced by a 7.1% increase (28.9% y/y) in the price of lead. Aluminum prices rose 2.6% and the cost of steel scrap improved 2.3%. Offsetting these increases, copper scrap prices fell 4.4% and zinc prices were off 1.5% (+42.2% y/y).

In the textile group, prices edged 0.5% higher during the last month as cotton prices increased 2.3%. A 0.7% rise (30.9% y/y) in the cost of burlap, used for sacks, bags and gardening, also contributed to the increase.

Economic improvement should provide support for industrial materials prices. Forecasts from the National Association for Business Economics suggest that industrial commodity prices should remain firm. It calls for a 5.9% rise in industrial output this year, followed by a 4.3% gain in 2022.

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.

How Much Slack Is Left in the Labor Market? from the Federal Reserve Bank of Dallas is available here.

FIBER Industrial Materials Price Index (%) 4-Week 3-Month 6-Month 12-Month 2020 2019 2018
All Items -1.9 3.4 10.6 36.6 13.5 1.1 -12.0
  Excluding Crude Oil -2.4 2.3 8.6 34.1 16.0 -0.6 -11.1
 Textiles 0.5 2.5 3.6 8.6 3.9 -1.6 -2.8
  Cotton (cents per pound) 2.3 12.0 11.5 39.8 11.6 -6.6 -9.2
 Metals 0.9 11.6 19.5 58.3 20.4 -4.3 -12.2
  Aluminum ($ per metric ton) 2.6 12.0 24.0 55.2 13.1 -6.5 -12.7
  Copper Scrap (cents per pound) -4.4 5.8 18.5 52.9 26.9 3.5 -16.1
  Steel Scrap ($ per ton) 2.3 12.5 10.2 98.9 43.6 -0.8 2.3
 Crude Oil & Benzene 3.8 7.3 23.8 48.0 -9.7 20.2 -20.0
  Crude Oil (WTI, $ per Barrel) 5.9 23.2 48.9 82.3 -21.4 35.5 -24.4
 Miscellaneous -8.7 -4.4 3.2 39.1 29.1 -0.0 -14.8
  Framing Lumber ($ per 1000 board ft.) -36.4 -32.3 -14.0 65.0 113.5 22.6 -23.1
  Natural Rubber (cents per pound) -13.6 -13.9 -12.0 22.5 48.6 10.7 -4.1
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