Global| Oct 06 2014FIBER: Industrial Commodity Prices Weaken Sharply
by:Tom Moeller
|in:Economy in Brief
Summary
Since late-August, the industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), has shown outsized weakness. The decline amounts to 4.1% (-3.1% y/y) and has been widespread [...]
Since late-August, the industrial commodity price index, from the Foundation for International Business and Economic Research (FIBER), has shown outsized weakness. The decline amounts to 4.1% (-3.1% y/y) and has been widespread amongst sectors.
A 5.2% price decline (-5.0% y/y) in the miscellaneous category paced the shortfall. That was led by a 12.6% drop (-39.6% y/y in natural rubber prices. It was followed by a 4.9% decline (+1.0% y/y) in framing lumber prices and a 1.0% drop (+6.3% y/y) in structural panel prices. Metals prices also were off 5.1% (+1.9% y/y), reflecting an 8.1% drop (+6.8% y/y) in the cost of aluminum. Not far behind was a 4.7% decline (-6.8% y/y) in copper scrap prices. Zinc prices followed with a 3.7% shortfall (+20.3% y/y) but steel scrap prices nudged 0.7% higher (7.0% y/y). Prices in the crude oil & benzene group similarly fell 4.2% (-5.2% y/y). It reflected a 2.5% drop (-10.5% y/y) in crude oil prices outpaced by a 15.8% decline (-4.1% y/y) in benzene costs. Showing more moderate weakness were prices in the textile group, off 1.4% (-4.6% y/y). Cotton prices were off 7.9% (-26.3% y/y) but burlap prices fell just 1.1% (+1.5% y/y).
Future support for commodity prices may be in prospect. The current industrial output projection from the National Association for Business Economics calls for 4.0% growth during all of this year then 3.7% growth in 2015. During the last ten years there has been a 52% correlation between the three-month change in prices and the change in factory sector output.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.
| FIBER Industrial Materials Price Index (1990=100) | 10/03/14 | Y/Y % | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| All Items | 159.71 | -3.1 | 169.0 | 166.4 | 173.0 |
| Textiles | 74.72 | -4.6 | 78.18 | 77.9 | 86.1 |
| Cotton (cents per pound) | 63.81 | -21.4 | 79.6 | 74.5 | 132.8 |
| Metals | 235.36 | 1.9 | 236.3 | 243.0 | 278.7 |
| Aluminum ($ per metric ton) | 1,869.0 | 4.7 | 1,846.3 | 2,019.6 | 2,400.9 |
| Copper Scrap (cents per pound) | 303.54 | -7.2 | 332.4 | 360.6 | 400.3 |
| Steel Scrap ($ per ton) | 359.0 | 7.0 | 346.0 | 366.7 | 412.6 |
| Crude Oil & Benzene | 200.13 | -5.2 | 207.7 | 204.1 | 199.3 |
| Crude Oil (WTI, $ per Barrel) | 90.59 | -12.3 | 97.9 | 94.2 | 95.0 |
| Miscellaneous | 194.27 | -5.0 | 218.3 | 205.3 | 190.6 |
| Framing Lumber ($ per 1000 board ft.) | 385 | 1.0 | 383 | 321 | 273 |
| Natural Rubber (cents per pound) | 110.11 | -39.1 | 189.9 | 211.9 | 262.3 |
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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