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Economy in Brief

FIBER: Industrial Commodity Prices Exhibit Strength
by Tom Moeller  August 14, 2017

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 3.2% during the last four weeks and gained 11.0% 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 1.2% y/y following a 0.7% rise in 2016.

Prices in the metals sector increased 4.0% during the last four weeks and have risen by one quarter y/y. Copper scrap prices increased 9.4% over the last four weeks and rose by one-third during the last year. Aluminum prices gained 3.5% in one month and 20.3% y/y. Steel scrap prices improved 1.5% during the last month, rising 29.0% y/y. In the miscellaneous group, prices improved 4.5% during the last month and rose 9.6% y/y. Prices for structural panels firmed 8.1% in the last month and rose 15.4% y/y. Framing lumber prices rose 7.0% in recent weeks, but were up 16.3% y/y. Natural rubber costs improved 6.7% m/m and recovered 2.1% y/y following a sharp decline early this year. Crude oil & benzene costs increased 3.0% (5.0% y/y). WTI crude oil prices strengthened 8.8% over the last four weeks to $49.24 per barrel, up from the $43.61 low late in June. Prices for the petro-chemical benzene eased 1.2% during the last four weeks and were off by more than one-half since the 2014 high. In the textile group, prices inched 0.8% higher during the last month, and rose a modest 2.3% y/y. Cotton prices recently strengthened 4.3%, but declined 4.9% y/y. Burlap prices moved 1.1% higher over the last four weeks and rose by one third 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 output 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 3.2 1.6 -0.2 11.0 19.2 -16.3 -10.0
 Textiles 0.8 -1.1 -0.8 2.3 2.8 2.2 -4.2
  Cotton (cents per pound) 4.3 -8.0 -6.5 -4.9 10.2 2.6 -24.2
 Metals 4.0 7.7 3.8 25.3 32.9 -27.8 -8.7
  Aluminum ($ per metric ton) 3.5 4.4 8.2 20.3 13.0 -19.2 9.4
  Copper Scrap (cents per pound) 9.4 15.7 9.5 32.7 17.3 -27.0 -12.0
  Steel Scrap ($ per ton) 1.5 2.8 -4.9 29.0 74.5 -53.8 -18.6
 Crude Oil & Benzene 3.0 0.3 -8.4 5.0 20.4 -19.4 -26.5
  Crude Oil (WTI, $ per Barrel) 8.8 5.1 -6.8 16.0 44.3 -35.8 -43.2
 Miscellaneous 4.5 -0.7 1.0 9.6 21.7 -18.0 -6.7
  Framing Lumber ($ per 1000 board ft.) 7.0 -0.5 16.7 16.3 12.9 -16.4 -1.6
  Natural Rubber (cents per pound) 6.7 -15.6 -38.6 2.1 89.4 -22.5 -32.3
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