Global| Jul 20 2018FIBER: Industrial Commodity Prices Post Further Weakness
by:Tom Moeller
|in:Economy in Brief
Summary
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 3.7% last month. It has fallen for five straight weeks. Despite the declines, the index has risen by 6.5% y/y. [...]
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 3.7% last month. It has fallen for five straight weeks. Despite the declines, the index has risen by 6.5% y/y.
The recent decline was led by an 8.4% m/m drop in metals prices, which remained up 3.8% y/y. Leading the decline was a 16.9% fall (-7.6% y/y) in zinc prices. Copper scrap prices were off 11.7% m/m (+3.1% y/y) and lead prices fell 10.9% in four weeks (-5.8% y/y). Aluminum prices weakened 5.0% m/m, but rose 9.9% y/y. To the supside, steel scrap prices improved 0.9% in the last month (29.0% y/y). Prices in the miscellaneous group fell 5.2% during the last four weeks (+5.2% y/y). Framing lumber prices declined 6.8% last month, up 29.4% y/y. Prices for structural panels were off 9.2% during the last four weeks, but rose 20.1% y/y during the last year. Natural rubber prices fell 2.9% in four weeks and were down 8.7% in the last year. Offsetting the declines last month was a 1.3% price rise (18.8% y/y) in the crude oil & benzene sector. Crude oil prices rose 5.1% during the last four weeks, but in the last two fell 6.7%, to an average $68.95 per barrel. Prices remained up by roughly one-half y/y. Offsetting that rise were benzene prices which fell 2.9% (+13.4% y/y) in the last four weeks. In the textile group, prices overall improved 0.4% last month (3.9% y/y). Cotton prices increased 2.2% over the last month (29.1% y/y) while burlap prices rose 0.9% m/m, but were down 2.1% during the past year.
Renewed strength in prices overall may be coming. The consensus forecast for industrial output from the National Association for Business Economics (NABE) calls for a 3.8% rise during all of 2018 and 2.8% growth in 2019. During the last ten years, there has been 50% correlation between the three-month change in prices and the change in U.S. industrial output. In addition, factory sector production in the European Union and Japan continues to improve.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases. The NABE forecast is in the SURVEYS database.
Assessing the Risk of Yield Curve Inversion: An Update from James Bullard, President & CEO, Federal Reserve Bank of St. Louis is available here.
| FIBER Industrial Materials Price Index (%) | 1-Mth | 3-Mth | 6-Mth | 12-Mth | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|
| All Items | -3.7 | -3.1 | -0.6 | 6.5 | 6.7 | 19.2 | -16.3 |
| Textiles | 0.4 | 0.7 | -0.1 | 3.9 | 3.0 | 2.8 | 2.2 |
| Cotton (cents per pound) | 2.2 | 7.5 | 7.7 | 29.1 | 9.8 | 10.2 | 2.6 |
| Metals | -8.4 | -10.8 | -10.1 | 3.8 | 18.6 | 32.9 | -27.8 |
| Aluminum ($ per metric ton) | -5.0 | -14.4 | -5.3 | 9.9 | 26.0 | 13.0 | -19.2 |
| Copper Scrap (cents per pound) | -11.7 | -11.1 | -13.8 | 3.1 | 29.3 | 17.3 | -27.0 |
| Steel Scrap ($ per ton) | 0.9 | -3.3 | 8.6 | 29.0 | 16.8 | 74.5 | -53.8 |
| Crude Oil & Benzene | 1.3 | -0.0 | 1.0 | 18.8 | 8.1 | 20.4 | -19.4 |
| Crude Oil (WTI, $ per Barrel) | 5.1 | 2.0 | 7.9 | 48.4 | 10.9 | 44.3 | -35.8 |
| Miscellaneous | -5.2 | -0.5 | 7.3 | 5.2 | -0.5 | 21.7 | -18.0 |
| Framing Lumber ($ per 1000 board ft.) | -6.8 | 7.7 | 19.6 | 29.4 | 20.0 | 12.9 | -16.4 |
| Natural Rubber (cents per pound) | -2.9 | -7.6 | -5.8 | -8.7 | -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
