Global| Dec 14 2015FIBER: Industrial Commodity Prices Remain Under Pressure
by:Tom Moeller
|in:Economy in Brief
Summary
October's improvement in industrial activity provided no lift to industrial commodity prices. The industrial commodity price index from the Foundation for International Business and Economic Research (FIBER) deteriorated by 1.6% [...]
October's improvement in industrial activity provided no lift to industrial commodity prices. The industrial commodity price index from the Foundation for International Business and Economic Research (FIBER) deteriorated by 1.6% during the last four weeks, leaving prices off 17.2% during the past year. In the U.S. alone, industrial production has risen a modest 1.4% so far this year and in the OECD output has fallen.
Within the sector groupings of prices, the FIBER indexes show broad-based weakness. In the crude oil & benzene area, the cost of WTI crude oil continued its downward trend to $35.62 per barrel on Friday. The 12.9% price decline in the last month left them off 39.1% y/y. Prices for the petro-chemical benzene improved 2.8% last month but remained down by one-quarter y/y. In the metals sector, there has been notable deterioration as well. Steel scrap prices fell 8.2% during the last four weeks and by more than one-half during the last year. Copper scrap prices also declined 7.0% m/m and 28.9% during the last year. Aluminum prices eased just slightly during the month but were down one-quarter y/y. Lead prices improved moderately over the last month but remained down 14.3% y/y. In the miscellaneous price grouping, framing lumber prices reversed most of their October improvement and retreated 5.7% over the last month, remaining off 14.8% y/y. Prices for structural panels similarly reversed their earlier improvement with a 2.4% decline during the last four weeks and were down 7.7% during the last year. Natural rubber prices rebounded 6.3% during the last month but still were off 9.3% y/y. Prices in the textile sector have shown comparative strength, nudging up slightly in the last month but remaining down a moderate 2.6% y/y. Cotton prices improved 4.3% in the last month and were up 7.7% y/y. Burlap prices rose 1.3% in the last four weeks and have been rising since the fall of 2014, up 14.7% y/y.
Overall, commodity prices could be nearing a bottom. The current industrial output projection from the National Association for Business Economics calls for 2.2% U.S. production growth in 2016, up from 1.5% growth this year. 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) | 1-Mth % | 3-Mth % | 6-Mth % | 12-Month % | 2014 % | 2013 % | 2012 % |
|---|---|---|---|---|---|---|---|
| All Items | -1.6 | -5.9 | -13.0 | -17.2 | -10.0 | -2.9 | 7.7% |
| Textiles | 0.8 | 1.4 | 0.8 | -2.6 | -4.2 | 0.4 | -2.4 |
| Cotton (cents per pound) | 4.3 | 4.1 | 1.9 | 7.7 | -24.2 | 10.8 | -15.8 |
| Metals | -3.1 | -13.2 | -20.6 | -30.8 | -8.7 | -3.5 | 5.9 |
| Aluminum ($ per metric ton) | -0.4 | -7.3 | -12.9 | -24.1 | 9.4 | -15.8 | 3.0 |
| Copper Scrap (cents per pound) | -7.0 | -13.3 | -22.8 | -28.9 | -12.0 | -6.8 | 3.8 |
| Steel Scrap ($ per ton) | -8.2 | -33.6 | -39.6 | -54.7 | -18.6 | 8.4 | -12.9 |
| Crude Oil & Benzene | -4.5 | -4.4 | -17.4 | -21.6 | -26.5 | 0.8 | 4.4 |
| Crude Oil (WTI, $ per Barrel) | -12.9 | -16.3 | -37.0 | -39.1 | -43.2 | 10.3 | -9.9 |
| Miscellaneous | -1.0 | -6.0 | -14.5 | -17.0 | -6.7 | -6.8 | 20.4 |
| Framing Lumber ($ per 1000 board ft.) | -5.7 | 4.7 | -3.1 | -14.8 | -1.6 | 3.5 | 37.9 |
| Natural Rubber (cents per pound) | 6.3 | -3.7 | -27.7 | -9.3 | -32.3 | -9.8 | -2.2 |
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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