FIBER: Industrial Commodity Prices Remain Soft

There hasn't been enough strength recently in the U.S. industrial sector to fully offset developing economic weakness in the rest of the world. As a result, prices for industrial materials remain under pressure. The industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), fell 3.4% as of Friday versus one year ago. Weakness amongst the component series was widespread.

An 8.0% y/y price decline in the crude oil & benzene grouping led the weakness, reflecting a 17.5% y/y decline in the price of WTI crude oil to $77.85 per barrel. That's down by roughly one-quarter from the June high of $107.53. In addition, prices for the petrochemical benzene are down roughly one-third from late-June. Prices in the miscellaneous category also were weak. They've softened 5.0% from last year as natural rubber prices fell roughly one-third y/y. Framing lumber also eased 3.1% y/y. Offsetting these declines was 12.2% y/y increase in random lengths of structural composites. Textile prices also worked 2.7% lower during the last year, paced by a 16.5% y/y decline in cotton prices. A 1.3% y/y increase in burlap prices countered this decline. Metals prices were not as weak, up 0.7% during the last year. Aluminum prices have been buoyant, up 15.6% y/y. Steel scrap prices also gained 1.7% y/y but they're off sharply from the early-year highs. To the downside have been copper scrap prices, off 6.2% y/y.

Future support for commodity prices may be on the way. The current industrial output projection from the National Association for Business Economics calls for 4.0% growth during all of this year, then 3.6% growth in 2015. During the last ten years there has been a 52% correlation between the three-month change in prices and the change in factory sector output.

Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.