Global| Dec 14 2020FIBER: Industrial Commodity Prices Demonstrate Upward Momentum
by:Tom Moeller
|in:Economy in Brief
Summary
• Factory sector growth has helped raise prices. • Commodity price strength is broad-based. Growth in factory sector output has been a mainstay of the economy's recovery. During the last six months, industrial production has risen by [...]
• Factory sector growth has helped raise prices.
• Commodity price strength is broad-based.
Growth in factory sector output has been a mainstay of the economy's recovery. During the last six months, industrial production has risen by 19.1%. 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 is leading the price increase with a 30.0% six-month rise and 11.1% during the last four weeks. Steel scrap prices have jumped 49.4% in six months and zinc prices have risen 37.9% during that period. The price of copper scrap is up by roughly one-third since April while aluminum prices have gained 27.6% in six months. Lead prices are close behind with an 18.8% six-month rise.
Prices in the crude oil & benzene group are up 23.3% during the last six months and 12.3% during the last four weeks. Prices of the petro-chemical benzene more than doubled in the last six months. A 21.0% half-year rise in crude oil prices to $46.08 per barrel accompanied the increase. Excluding crude oil, industrial commodity prices have risen 22.4% in six months and 6.9% in the last four weeks.
These price gains have been accompanied by a roughly one-third price rise in the miscellaneous group during the last six months. Framing lumber costs more than doubled during the period. This increase was accompanied by a 55.2% half-year rise in natural rubber prices. Plywood prices have been unchanged since December 2019.
Prices in the textile group prices have improved 4.3% in the last six months as cotton prices rose 21.5%. The cost of burlap, used for sacks, bags and gardening improved 11.5% in six months and 4.7% in the last month alone.
Continued recovery in industrial output will help support commodity prices. Forecasts from the National Association for Business Economics call for a 3.4% four-quarter rise in real GDP in 2021, following a 2.6% decline this year.
The Foundation for International Business and Economic Research (FIBER) develops economic measurement techniques as applied to business cycles and inflation in the U.S. and other market economies. The commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.
| FIBER Industrial Materials Price Index (%) | 4-Week | 3-Month | 6-Month | 12-Month | 2019 | 2018 | 2017 |
|---|---|---|---|---|---|---|---|
| All Items | 7.3 | 8.9 | 22.4 | 12.3 | 1.1 | -12.0 | 6.7 |
| Excluding Crude Oil | 6.9 | 8.2 | 22.4 | 14.7 | -0.6 | -11.1 | 4.9 |
| Textiles | 0.9 | 2.8 | 4.3 | 4.0 | -1.6 | -2.8 | 3.0 |
| Cotton (cents per pound) | 4.7 | 16.8 | 21.5 | 11.3 | -6.6 | -9.2 | 9.8 |
| Metals | 11.1 | 14.2 | 30.0 | 20.3 | -4.3 | -12.2 | 18.6 |
| Aluminum ($ per metric ton) | 5.9 | 15.0 | 27.6 | 14.7 | -6.5 | -12.7 | 26.0 |
| Copper Scrap (cents per pound) | 11.0 | 14.2 | 34.8 | 27.8 | 3.5 | -16.1 | 29.3 |
| Steel Scrap ($ per ton) | 28.1 | 29.1 | 49.4 | 35.3 | -0.8 | 2.3 | 16.8 |
| Crude Oil & Benzene | 12.3 | 19.8 | 23.3 | -8.8 | 20.2 | -20.0 | 8.1 |
| Crude Oil (WTI, $ per Barrel) | 14.0 | 20.9 | 21.0 | -22.0 | 35.5 | -24.4 | 10.9 |
| Miscellaneous | 7.2 | 4.6 | 31.7 | 23.9 | -0.0 | -14.8 | -0.5 |
| Framing Lumber ($ per 1000 board ft.) | 27.9 | -16.5 | 103.9 | 83.8 | 22.6 | -23.1 | 20.0 |
| Natural Rubber (cents per pound) | 9.0 | 22.2 | 55.2 | 54.2 | 10.7 | -4.1 | -29.6 |
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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