Global| Jan 19 2016FIBER: Industrial Commodity Price Decline Continues
by:Tom Moeller
|in:Economy in Brief
Summary
Sluggish growth in worldwide economies continues to put downward pressure on industrial commodity prices. The industrial price index from the Foundation for International Business and Economic Research (FIBER) deteriorated by 0.7% [...]
Sluggish growth in worldwide economies continues to put downward pressure on industrial commodity prices. The industrial price index from the Foundation for International Business and Economic Research (FIBER) deteriorated by 0.7% during the last four weeks, leaving prices off 14.8% during the past year. In the U.S. alone, a 0.8% rise in factory sector production for all of 2015 did little to offset weakness in the rest of the industrialized world.
Within the sector groupings of prices, the FIBER indexes show broad-based weakness. In the crude oil & benzene area, the cost of WTI crude oil continued its downward trend to $29.42 per barrel on Friday. The 11.7% price decline in the last month left them off 39.3% y/y and down by roughly three-quarters from the August 2013 high of $110.17. Prices for the petro-chemical benzene fell 2.8% last month and remained down by roughly two-thirds from the 2014 high. In the metals sector, there has been notable deterioration as well. Steel scrap prices stabilized this month but remained down by three-quarters from the early-2014 high. Copper scrap prices continued on the downtrend this month, off 4.5% m/m and 56.0% since the 2011 peak. Aluminum prices improved slightly during the last two months but were down 44.0% from the 2011 high. The decline in lead prices also stabilized since the fall but remained down roughly two-thirds from the 2011 high. In the miscellaneous price grouping, framing lumber prices improved recently, but were 29.0% below the 2013 peak. Prices for structural panels similarly stabilized of late, yet were down 8.4% during the last year. Natural rubber prices remained under pressure and were off by one-quarter y/y. Prices in the textile sector have shown comparative strength, nudging up slightly in the last month and were unchanged y/y. Cotton prices were stable but down by two-thirds from the 2011 high. On the strong-side have been burlap prices, up by one-quarter y/y.
Overall, commodity prices could be nearing a bottom. The current industrial output projection from the National Association for Business Economics calls for 2.2% U.S. production growth in 2016, up from 1.5% growth this year. During the last ten years, there has been a 52% correlation between the three-month change in prices and the change in industrial output.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.
| FIBER Industrial Materials Price Index (1990=100) | 1-Mth % | 3-Mth % | 6-Mth % | 12-Month % | 2014 % | 2013 % | 2012 % |
|---|---|---|---|---|---|---|---|
| All Items | -0.7 | -6.2 | -11.9 | -14.8 | -10.0 | -2.9 | 7.7% |
| Textiles | 0.3 | 1.2 | 1.0 | 2.9 | -4.2 | 0.4 | -2.4 |
| Cotton (cents per pound) | -2.3 | -1.0 | -2.9 | 3.3 | -24.2 | 10.8 | -15.8 |
| Metals | -2.8 | -14.6 | -20.4 | -28.3 | -8.7 | -3.5 | 5.9 |
| Aluminum ($ per metric ton) | -1.0 | -7.3 | -11.7 | -17.5 | 9.4 | -15.8 | 3.0 |
| Copper Scrap (cents per pound) | -4.5 | -16.9 | -20.9 | -25.6 | -12.0 | -6.8 | 3.8 |
| Steel Scrap ($ per ton) | 2.3 | -23.2 | -41.1 | -53.1 | -18.6 | 8.4 | -12.9 |
| Crude Oil & Benzene | -5.7 | -14.8 | -22.8 | -13.5 | -26.5 | 0.8 | 4.4 |
| Crude Oil (WTI, $ per Barrel) | -13.2 | -34.5 | -40.1 | -33.6 | -43.2 | 10.3 | -9.9 |
| Miscellaneous | 2.7 | -0.0 | -8.4 | -15.8 | -6.7 | -6.8 | 20.4 |
| Framing Lumber ($ per 1000 board ft.) | 1.9 | 4.9 | -8.0 | -16.4 | -1.6 | 3.5 | 37.9 |
| Natural Rubber (cents per pound) | -5.2 | -8.5 | -23.7 | -24.0 | -32.3 | -9.8 | -2.2 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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