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Viewpoints
Commentaries are the opinions of the author and do not reflect the views of Haver Analytics.
by Tom Moeller June 19, 2020
• Prices post broad-based increases.
• Crude oil prices lead the upturn.
• Metals prices firm.
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 2.8% during the four weeks ended today. The price index has rebounded to the highest level since the second week of March. Nevertheless, prices remained 9.7% lower than twelve months ago.
Strength in the crude oil & benzene group led the price increase in the last four weeks with a 15.4% rise. WTI crude oil prices improved to $37.42 per barrel, up from $25.28 in the middle of May. Prices remained down, however, from a high of $61.92 in the first week of January. Prices of the petro-chemical benzene rose 24.2% in the last four weeks but remained down by roughly one-half y/y. Excluding crude oil, industrial commodity prices rose 2.0% during the last four weeks but fell 8.2% during the last year.
Prices in the metals group improved 6.8% during the last four weeks as the cost of copper scrap rose 8.6% and lead prices increased 7.9% (-7.0% y/y). Aluminum prices strengthened 7.7% while steel scrap prices gained 5.3%. The price of zinc edged 0.2% higher in four weeks but fell 22.4% y/y. Prices in the textile group posted a modest 0.8% increase but cotton prices strengthened 3.0%. This gain was accompanied by a 2.6% rise (3.7% y/y) in the cost of burlap which is used for sacks, bags and gardening.
Working lower were prices in the miscellaneous group which were off 2.3% in the last month. The cost of tallow (used for food preparation) fell 29.1% in four weeks (-17.3% y/y) and reversed its earlier increases. Framing lumber prices rose 4.0% in four weeks but the cost of plywood held steady (-2.4% y/y). Natural rubber prices increased 9.8% over the last month.
Improved activity in the factory sector is an underpinning of the rise in industrial materials prices. Industrial output increased 3.8% in May (-16.5% y/y) following a 15.5% April decline. During the last ten years, there has been a 54% correlation between the y/y change in industrial commodity prices and the y/y change in factory sector production.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases.
COVID-19 Stuns U.S. and Tenth District Economies, but Both Show Signs of Stabilization from the Federal Reserve Bank of Kansas City is available here.
FIBER Industrial Materials Price Index (%) | 1-Mth | 3-Mth | 6-Mth | 12-Mth | 2019 | 2018 | 2017 |
---|---|---|---|---|---|---|---|
All Items | 2.8 | 0.9 | -9.4 | -9.7 | 1.1 | -12.0 | 6.7 |
Excluding Crude Oil | 2.0 | -0.9 | -7.2 | -8.2 | -0.6 | -11.1 | 4.9 |
Textiles | 0.8 | 1.4 | -0.6 | -1.0 | -1.6 | -2.8 | 3.0 |
Cotton (cents per pound) | 3.0 | 5.5 | -11.2 | -8.7 | -6.6 | -9.2 | 9.8 |
Metals | 6.8 | 4.8 | -8.2 | -10.0 | -4.3 | -12.2 | 18.6 |
Aluminum ($ per metric ton) | 7.7 | -3.8 | -10.9 | -10.0 | -6.5 | -12.7 | 26.0 |
Copper Scrap (cents per pound) | 8.6 | 11.2 | -6.6 | -1.8 | 3.5 | -16.1 | 29.3 |
Steel Scrap ($ per ton) | 5.3 | -1.4 | -11.3 | -9.8 | -0.8 | 2.3 | 16.8 |
Crude Oil & Benzene | 10.1 | 4.8 | -27.3 | -25.3 | 20.2 | -20.0 | 8.1 |
Crude Oil (WTI, $ per Barrel) | 15.4 | 36.8 | -38.2 | -30.6 | 35.5 | -24.4 | 10.9 |
Miscellaneous | -2.3 | -4.4 | -7.7 | -8.0 | -0.0 | -14.8 | -0.5 |
Framing Lumber ($ per 1000 board ft.) | 4.0 | 16.0 | -9.5 | 11.3 | 22.6 | -23.1 | 20.0 |
Natural Rubber (cents per pound) | 9.8 | 3.2 | -0.3 | -18.6 | 10.7 | -4.1 | -29.6 |