Global| Aug 20 2018FIBER: Industrial Commodity Prices Move Lower
by:Tom Moeller
|in:Economy in Brief
Summary
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) fell 3.7% last month and extended the retreat in prices since the peak two months ago. The decline left the index [...]
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) fell 3.7% last month and extended the retreat in prices since the peak two months ago. The decline left the index unchanged over the last twelve months. During the last ten years there has been a 65% correlation between the y/y change in industrial commodity prices and the y/y change in factory sector output.
Recent weakness was paced by a 7.3% one-month price decline (-4.7% y/y) in the miscellaneous group. Framing lumber prices declined 17.3% last month, but remained up 4.0% y/y. Prices for structural panels were off 11.3% during the last four weeks, but rose 1.3% y/y during the last year. Natural rubber prices eased 0.5% in four weeks and were down 12.0% in the last year. Prices in the metals group declined 3.6% in the last four weeks and were off 5.4% y/y. Leading the decline were zinc prices, off 5.1% m/m (-17.9% y/y). Steel scrap prices also were down 5.1% m/m (+15.9% y/y). Lead prices declined 4.4% over four weeks and 13.6% in a year. Aluminum prices weakened 3.0% m/m and eased 1.7% y/y. Also continuing to fall were copper scrap prices, off 1.8% in four weeks and 6.3% y/y. The textile group moved lower as well, where prices overall fell 1.0% last month (+2.6% y/y). Cotton prices declined 6.8% over the four weeks (+20.4% y/y) while burlap prices rose 1.1% m/m, but were down 3.9% during the past year. Prices in the crude oil & benzene sector fell by 0.7% m/m and were up 16.9% y/y. Crude oil prices fell 3.1% during the last four weeks, but rose by 40.3 y/y to an average $66.81 per barrel. Accompanying the recent decline was a 2.7% m/m rise in benzene prices which gained 16.2% y/y.
Renewed strength in prices overall may be coming. The consensus forecast for industrial output from the National Association for Business Economics (NABE) calls for a 3.8% rise during all of 2018 and 2.8% growth in 2019. During the last ten years, there has been 50% correlation between the three-month change in prices and the change in U.S. industrial output. In addition, factory sector production in the European Union and Japan continues to improve.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases. The NABE forecast is in the SURVEYS database.
| FIBER Industrial Materials Price Index (%) | 1-Mth | 3-Mth | 6-Mth | 12-Mth | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| All Items | -3.7 | -7.2 | -5.3 | -0.0 | 6.7 | 19.2 | -16.3 |
| Textiles | -1.0 | -0.3 | -0.0 | 2.6 | 3.0 | 2.8 | 2.2 |
| Cotton (cents per pound) | -6.8 | -1.1 | 7.7 | 20.4 | 9.8 | 10.2 | 2.6 |
| Metals | -3.6 | -11.9 | -13.5 | -5.4 | 18.6 | 32.9 | -27.8 |
| Aluminum ($ per metric ton) | -3.0 | -11.8 | -5.4 | -1.7 | 26.0 | 13.0 | -19.2 |
| Copper Scrap (cents per pound) | -1.8 | -12.2 | -13.2 | -6.3 | 29.3 | 17.3 | -27.0 |
| Steel Scrap ($ per ton) | -5.1 | -5.6 | 11.5 | 15.9 | 16.8 | 74.5 | -53.8 |
| Crude Oil & Benzene | -0.7 | -2.3 | 3.2 | 16.9 | 8.1 | 20.4 | -19.4 |
| Crude Oil (WTI, $ per Barrel) | -3.1 | -6.3 | 11.0 | 40.3 | 10.9 | 44.3 | -35.8 |
| Miscellaneous | -7.3 | -10.6 | -6.0 | -4.7 | -0.5 | 21.7 | -18.0 |
| Framing Lumber ($ per 1000 board ft.) | -17.3 | -19.0 | -10.6 | 4.0 | 20.0 | 12.9 | -16.4 |
| Natural Rubber (cents per pound) | -0.5 | -12.8 | -4.5 | -12.0 | -29.6 | 89.4 | -22.5 |
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.
More Economy in Brief
