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Economy in Brief

FIBER: Industrial Commodity Prices Soften
by Tom Moeller  June 19, 2017

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
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