Global| Jun 19 2017FIBER: Industrial Commodity Prices Soften
by:Tom Moeller
|in:Economy in Brief
Summary
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 2.7% during the last four weeks, but remained up 9.1% during the last twelve months. This adds to the strength [...]
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) declined 2.7% during the last four weeks, but remained up 9.1% during the last twelve months. This adds to the strength during all of last year when prices rose 19.2%. Recent price weakness occurred as factory sector production fell 0.4% during May, down for the second month in the last three.
In the miscellaneous group, prices declined 4.9% during the last month, but rose 7.4% y/y. Framing lumber prices weakened 5.2% in recent weeks and were up a lessened 13.1% y/y. Prices for structural panels similarly fell 4.3% in the last month, but rose 7.8% y/y. Natural rubber costs declined 17.6% m/m, but rose 16.9% y/y. Crude oil & benzene costs were off 2.5% (+2.5% y/y) last month. WTI crude oil prices fell 6.6% (-5.1% y/y) to $45.44 per barrel, the lowest level since late-November. Prices for the petro-chemical benzene most recently eased slightly, but were off roughly one-half since the 2014 high. In the textile group, prices fell 1.6% during the last month, but rose a moderate 4.7% y/y. Cotton prices recently declined 8.7%, but remained 15.7% higher y/y. Burlap prices fell 1.1% over the last four weeks, yet rose by roughly one-quarter y/y. Prices in the metals sector declined 1.1% during the last four weeks, but still have risen 19.1% y/y. Zinc prices fell 2.5% last month, but rose 21.4% y/y. Aluminum prices weakened 1.1%, but improved 18.1% y/y. Steel scrap prices followed with a 0.7% dip, but they're higher by 15.3% y/y. To the upside, copper scrap prices improved 2.6% last month and have risen 25.5% y/y.
Further price improvement may be coming. The current industrial output projection from the National Association for Business Economics (NABE) calls for a 1.5% increase in industrial production during all of 2017 and a 2.4% rise in 2018. During the last ten years, there has been a 52% correlation between the three-month change in prices and the change in U.S. industrial output. In addition, factory sector production in the European Union and Japan is strengthening.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases. The NABE forecast is in the SURVEYS database.
| FIBER Industrial Materials Price Index (%) | 1-Mth | 3-Mth | 6-Mth | 12-Mth | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|
| All Items | -2.7 | -3.8 | -0.5 | 9.1 | 19.2 | -16.3 | -10.0 |
| Textiles | -1.6 | -0.8 | 1.1 | 4.7 | 2.8 | 2.2 | -4.2 |
| Cotton (cents per pound) | -8.7 | -3.8 | 1.6 | 15.7 | 10.2 | 2.6 | -24.2 |
| Metals | -1.1 | -4.3 | -0.6 | 19.1 | 32.9 | -27.8 | -8.7 |
| Aluminum ($ per metric ton) | -1.1 | 0.4 | 7.8 | 18.1 | 13.0 | -19.2 | 9.4 |
| Copper Scrap (cents per pound) | 2.6 | -1.9 | -1.0 | 25.5 | 17.3 | -27.0 | -12.0 |
| Steel Scrap ($ per ton) | -0.7 | -4.5 | 22.9 | 15.3 | 74.5 | -53.8 | -18.6 |
| Crude Oil & Benzene | -2.5 | -5.3 | -5.8 | 2.5 | 20.4 | -19.4 | -26.5 |
| Crude Oil (WTI, $ per Barrel) | -6.6 | -6.8 | -12.3 | -5.1 | 44.3 | -35.8 | -43.2 |
| Miscellaneous | -4.9 | -5.0 | 0.7 | 7.4 | 21.7 | -18.0 | -6.7 |
| Framing Lumber ($ per 1000 board ft.) | -5.2 | -1.0 | 10.9 | 13.1 | 12.9 | -16.4 | -1.6 |
| Natural Rubber (cents per pound) | -17.6 | -26.7 | -24.8 | 16.9 | 89.4 | -22.5 | -32.3 |
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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