Global| Sep 14 2015FIBER: Industrial Commodity Prices Remain Under Pressure
by:Tom Moeller
|in:Economy in Brief
Summary
Only moderate improvement in U.S. economic activity combined with weakness in the rest of the world provided little support to crude materials prices last month. The industrial commodity price index from the Foundation for [...]
Only moderate improvement in U.S. economic activity combined with weakness in the rest of the world provided little support to crude materials prices last month. The industrial commodity price index from the Foundation for International Business and Economic Research (FIBER) deteriorated by 1.0% during the last four weeks, leaving prices off 6.5% during the past year. In the U.S. alone, a 0.8% rise in factory sector production during July left output so far this year up a modest 0.5% and just 1.4% during the last twelve months. Growth abroad similarly remained weak.
Within the sector groupings of prices, the FIBER measures show broad-based weakness. In the crude oil & benzene area, WTI crude oil continued its downward trend nearing $45.00, off by one-half y/y. Prices for the petro-chemical benzene also remained under pressure, off by one quarter during the last month and off more than one-half y/y. In the metals sector, prices were mixed. Steel scrap prices fell 9.0% during the last four weeks and by 40.9% during the last year. Aluminum prices, however, firmed 2.1% m/m (-21.5% y/y) and copper scrap prices also bounced 3.5% off the six-year low (-23.5% y/y). Lead prices similarly stabilized m/m but fell 18.9% y/y. In the miscellaneous price grouping, framing lumber prices remain under pressure but the degree of weakness (-27.0% y/y) seems little-affected by firmer U.S. home building activity. Prices for structural panels, however, have risen 5.9% during the last four weeks (-10.6% y/y). Natural rubber prices continue to soften (-11.3% y/y). Prices in the textile sector have shown comparative strength, easing just 0.5% during the last year. Cotton prices have declined 10.0% y/y, while burlap prices have risen 11.3% y/y.
Support for commodity prices may be on the way. The current industrial output projection from the National Association for Business Economics calls for 2.3% U.S. production growth in 2015 followed by a 3.0% rise next year. This year's projected increase is diminished, however from earlier expectations. During the last ten years, there has been a 52% correlation between the three-month change in prices and the change in industrial output.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.
| FIBER Industrial Materials Price Index (1990=100) | 09/11/15 | 1-Mth % | 3-Mth % | 6-Mth % | Y/Y % | 2014 | 2013 |
|---|---|---|---|---|---|---|---|
| All Items | 134.0 | -1.0 | -7.5 | -6.5 | -18.6 | 163.5 | 169.0 |
| Textiles | 75.2 | -0.3 | -0.5 | 0.8 | -0.5 | 76.8 | 78.2 |
| Cotton (cents per pound) | 63.90 | -0.1 | -3.2 | 1.6 | -10.0 | 73.6 | 79.6 |
| Metals | 181.3 | -0.5 | -8.6 | -8.6 | -25.7 | 237.8 | 236.2 |
| Aluminum ($ per metric ton) | 1,521.0 | 3.6 | -6.1 | -8.8 | -21.5 | 1,864.9 | 1,846.7 |
| Copper Scrap (cents per pound) | 210.67 | 3.3 | -10.9 | -8.7 | -23.5 | 311.7 | 332.3 |
| Steel Scrap ($ per ton) | 247.27 | -9.0 | -9.1 | -7.1 | -40.9 | 358.3 | 345.8 |
| Crude Oil & Benzene | 133.8 | -6.3 | -13.6 | -6.1 | -34.9 | 205.2 | 207.7 |
| Crude Oil (WTI, $ per Barrel) | 45.20 | 4.1 | -24.7 | -7.4 | -51.2 | 93.5 | 97.9 |
| Miscellaneous | 167.5 | 0.6 | -9.0 | -10.4 | -16.7 | 199.6 | 218.3 |
| Framing Lumber ($ per 1000 board ft.) | 326 | -9.4 | -7.5 | -12.6 | -27.0 | 383 | 383 |
| Natural Rubber (cents per pound) | 108.65 | -9.7 | -24.9 | -19.0 | -11.3 | 140.2 | 190.0 |
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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