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Economy in Brief

FIBER: Industrial Commodity Prices Improve
by Tom Moeller  July 12, 2017

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 0.7% during the last four weeks, and were up 9.4% during the last twelve months. This adds to the strength during all of last year when prices rose 19.2%. Recent price improvement comes at a time when factory output increased 1.5% versus a low nine months ago.

Prices in the metals sector increased 4.3% during the last four weeks and have risen 21.7% y/y. Zinc prices rebounded 12.1% last month and rose by one-third y/y. Copper scrap prices increased 5.0% over the last four weeks and rose 23.1% during the last year. Aluminum prices gained 0.5% in one month and 17.4% y/y. Steel scrap prices fell 1.9% during the last month, but rose 20.0% y/y. In the miscellaneous group, prices improved 0.6% during the last month and rose 7.1% y/y. Prices for structural panels similarly firmed 5.0% in the last month and rose 10.8% y/y. Tallow prices also improved 1.1% m/m and 25.2% y/y. Framing lumber prices weakened 1.2% in recent weeks but were up 14.4% y/y. Natural rubber costs declined 4.9% m/m and fell 1.8% y/y. Crude oil & benzene costs were off 1.7% (+2.7% y/y) last month. WTI crude oil prices fell 2.3% over the last four weeks to $45.94 per barrel, but firmed versus the $43.61 low late in June. Prices for the petro-chemical benzene most recently eased 4.4% during the last four weeks and were off by more than one-half since the 2014 high. In the textile group, prices fell 1.4% during the last month, but rose a modest 3.7% y/y. Cotton prices recently declined 8.9%, but remained 5.4% higher y/y. Burlap prices moved 0.8% higher over the last four weeks and rose 30.1% y/y.

Further price improvement may be coming. The current industrial output projection from the National Association for Business Economics (NABE) calls for a 2.7% increase in industrial production during all of 2017 and a 0.9% 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.

The Semiannual Monetary Policy Report to Congress by Fed Chair Janet L. Yellen can be found here.

FIBER Industrial Materials Price Index (%) 1-Mth 3-Mth 6-Mth 12-Mth 2016 2015 2014
All Items 0.7 -2.9 0.9 9.4 19.2 -16.3 -10.0
 Textiles -1.4 -1.7 -0.0 3.7 2.8 2.2 -4.2
  Cotton (cents per pound) -8.9 -7.6 -6.1 5.4 10.2 2.6 -24.2
 Metals 4.3 -1.8 6.5 21.7 32.9 -27.8 -8.7
  Aluminum ($ per metric ton) 0.5 -1.7 12.3 17.4 13.0 -19.2 9.4
  Copper Scrap (cents per pound) 5.0 0.8 5.7 23.1 17.3 -27.0 -12.0
  Steel Scrap ($ per ton) -1.9 -8.7 5.4 20.0 74.5 -53.8 -18.6
 Crude Oil & Benzene -1.7 -5.0 -7.4 2.7 20.4 -19.4 -26.5
  Crude Oil (WTI, $ per Barrel) -2.3 -10.2 -14.0 -2.7 44.3 -35.8 -43.2
 Miscellaneous 0.6 -3.7 1.0 7.1 21.7 -18.0 -6.7
  Framing Lumber ($ per 1000 board ft.) -1.2 -1.2 10.6 14.4 12.9 -16.4 -1.6
  Natural Rubber (cents per pound) -4.9 -27.3 -28.9 -1.8 89.4 -22.5 -32.3
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