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Economy in Brief

FIBER: Industrial Commodity Prices Improve
by Tom Moeller  February 11, 2016

Despite continued weakness in factory sector output around the world during January, industrial commodity prices showed scattered improvement. The industrial price index from the Foundation for International Business and Economic Research (FIBER) increased 1.3% during the last four weeks. Nevertheless, prices remained down 12.7% during the past year as worldwide factory output remained under pressure. In the U.S. alone, factory sector production fell 0.1% in both November & December (+0.8% y/y).

Within the sector groupings of prices, the FIBER indexes showed gains for some products. In the metals sector, steel scrap prices increased 17.6% last month, but remained down roughly one-half y/y. Aluminum prices rose 3.6% during January though have moved 17.8% lower during the last year. Copper scrap prices continued on the down-trend, off 0.7% m/m and down 18.1% y/y. In the miscellaneous price grouping, rubber prices improved 9.9% last month, but they were off by nearly one-quarter y/y. Framing lumber prices have realized little improvement due to housing market strength. They fell 4.7% during January and 15.7% y/y. Prices for structural panels similarly were down 2.8% in the last month and 7.4% during the last year. In the crude oil & benzene area, the cost of WTI crude oil continued its downward trend to $27.45 per barrel yesterday. The roughly 12.0% price decline in the last month left prices off nearly 40.0% y/y, down by roughly three-quarters from the August 2013 high of $110.17. Prices for the petro-chemical benzene fell 12.6% last month to the 2009 low, down by roughly two-thirds from the 2014 high. Prices in the textile sector have shown comparative strength. Cotton prices have been stable since September, but down by two-thirds from the 2011 high. On the strong-side have been burlap prices, up roughly one-third y/y.

Overall, commodity prices could be nearing a bottom. The current industrial output projection from the National Association for Business Economics calls for 2.2% U.S. production growth in 2016, up from 1.5% growth this year. 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.

FIBER Industrial Materials Price Index (1990=100) 1-Mth % 3-Mth % 6-Mth % 12-Month % 2015 % 2014 % 2013 %
All Items 1.3 -1.6 -6.9 -12.7 -16.3 -10.0 -2.9
 Textiles 0.7 1.3 1.6 3.2 2.2 -4.2 0.4
  Cotton (cents per pound) -1.5 -1.0 -1.3 1.4 2.6 -24.2 10.8
 Metals 5.2 0.6 -10.5 -22.7 -27.8 -8.7 -3.5
  Aluminum ($ per metric ton) 3.6 4.2 -3.0 -17.8 -19.2 9.4 -15.8
  Copper Scrap (cents per pound) -0.7 -10.5 -11.6 -18.1 -27.0 -12.0 -6.8
  Steel Scrap ($ per ton) 17.6 9.8 -29.3 -48.4 -53.8 -18.6 8.4
 Crude Oil & Benzene -6.8 -16.1 -20.2 -17.2 -19.4 -26.5 0.8
  Crude Oil (WTI, $ per Barrel) -11.2 -32.1 -30.8 -36.8 -35.8 -43.2 10.3
 Miscellaneous 2.5 1.6 -3.6 -13.5 -18.0 -6.7 -6.8
  Framing Lumber ($ per 1000 board ft.) -4.7 -7.6 -8.1 -15.7 -16.4 -1.6 3.5
  Natural Rubber (cents per pound) 9.9 5.5 -14.5 -21.1 -22.5 -32.3 -9.8
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