FIBER: Industrial Commodity Prices Stabilize

The industrial commodity price index from the Foundation for International Business and Economic Research (FIBER) improved slightly during the last five weeks following declines which total 13.1% during the last year.

The crude oil & benzene grouping led the improvement with a 3.5% rise since late-January. The price for a barrel of WTI crude oil rallied to $50.50 as of yesterday from its January low of $45.04. Prices reached $53.14 on Tuesday. The same cannot be observed for the petro-chemical benzene where prices reached a new low last week (-62.2% y/y). Prices in the textile sector also improved 1.8% during the last month. Cotton prices led the gain with a 13.0% rise from the low (-23.3% y/y). In the miscellaneous materials grouping, prices improved 2.6% (-3.1% y/y) since the low earlier this month. Natural rubber prices led the way higher with a 13.2% rise (-14.5% y/y) since the January low. Structural panel prices notched slightly higher this month and have improved 6.7% versus last year. Prices for framing lumber, however, remain weak (-6.9% y/y), reaching the lowest level since 2013. In the metals sector, prices remain weak. The 17.2% y/y decline has left the index level at its lowest point since July 2009. Steel scrap prices led the way lower with a 39.4% y/y decline and they are down by nearly one-half from the 2011 high. Copper scrap prices have been similarly weak, posting a 43.0% decline from the 2011 high (-21.2% y/y). Aluminum prices have weakened 13.7% since the late-November high but they remain up 4.0% 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 3.5% growth in industrial production in 2015. 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.