Global| Oct 14 2019FIBER: Industrial Commodity Prices Remain Under Pressure
by:Tom Moeller
|in:Economy in Brief
Summary
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 1.4% during the last four weeks. The price index was down 11.1% y/y and remained at the lowest level since [...]
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 1.4% during the last four weeks. The price index was down 11.1% y/y and remained at the lowest level since spring 2016.
Prices amongst most product categories prices fell recently. Metals were off 1.8% (-11.3% y/y) over the last month, reflecting a 4.6% m/m decline in steel scrap prices. The cost of aluminum fell 2.9% and copper scrap prices were off 2.3% last month. Working 3.8% higher (11.7% y/y) were lead prices during the last four weeks. Zinc prices also edged up 0.4% last month (-12.3% y/y). Prices in the miscellaneous grouping fell 2.2% (-14.1% y/y) as natural rubber prices declined 8.5% (-5.0% y/y). Framing lumber countered this decline with a 2.2% rise in the last four weeks. Structural panel prices held steady last month but they were off roughly one-quarter y/y. Prices in the crude oil & benzene category fell 1.9% m/m. Crude oil prices declined to $52.91 per barrel by the end of the month and remained below their early-October peak of $75.05. Prices for the petro-chemical benzene rose 3.7% recently (-13.4% y/y). To the upside by 0.5% were prices in the textile group, but they remained down 4.8% y/y. Cotton prices strengthened 5.1%. Nevertheless, they were 19.4% lower y/y. Burlap prices declined 2.9% m/m and 13.2% y/y.
Economic activity will do little to support commodity prices over the short term. Recessions outside of the U.S. are continuing and U.S. factory output growth is projected to slow. Industrial production grew 4.0% last year. The consensus forecast from the National Association for Business Economics (NABE) recently was lowered and now calls for a 0.9% rise in production both this year and next. During the last ten years, there has been a 71% correlation between the y/y change in industrial commodity prices and the y/y change in factory sector output.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases. The NABE forecast is in the SURVEYS database.
| FIBER Industrial Materials Price Index (%) | 1-Mth | 3-Mth | 6-Mth | 12-Mth | 2018 | 2017 | 2016 |
|---|---|---|---|---|---|---|---|
| All Items | -1.4 | -3.7 | -8.2 | -11.1 | -12.0 | 6.7 | 19.2 |
| Textiles | 0.5 | -1.0 | -4.6 | -4.8 | -2.8 | 3.0 | 2.8 |
| Cotton (cents per pound) | 5.1 | 0.6 | -19.0 | -19.4 | -9.2 | 9.8 | 10.2 |
| Metals | -1.8 | -4.8 | -13.0 | -11.3 | -12.2 | 18.6 | 32.9 |
| Aluminum ($ per metric ton) | -2.9 | -3.9 | -7.1 | -16.4 | -12.7 | 26.0 | 13.0 |
| Copper Scrap (cents per pound) | -2.3 | -3.8 | -12.4 | -9.0 | -16.1 | 29.3 | 17.3 |
| Steel Scrap ($ per ton) | -4.6 | -20.4 | -23.7 | -26.4 | 2.3 | 16.8 | 74.5 |
| Crude Oil & Benzene | -1.9 | -4.9 | -4.6 | -14.0 | -20.0 | 8.1 | 20.4 |
| Crude Oil (WTI, $ per Barrel) | -6.8 | -10.3 | -17.3 | -27.9 | -24.4 | 10.9 | 44.3 |
| Miscellaneous | -2.2 | -4.3 | -8.2 | -14.1 | -14.8 | -0.5 | 21.7 |
| Framing Lumber ($ per 1000 board ft.) | 2.2 | 1.7 | 2.0 | -6.2 | -23.1 | 20.0 | 12.9 |
| Natural Rubber (cents per pound) | -8.5 | -20.8 | -17.3 | -5.0 | -4.1 | -29.6 | 89.4 |
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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