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Economy in Brief

FIBER: Industrial Commodity Prices Move Higher
by Tom Moeller  October 16, 2017

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 1.7% during the last four weeks and gained 14.3% during the last twelve months. During all of last year, prices rose 19.2%. The index level of 161.8 stood at the highest point since September 2014. Recent price improvement comes at a time when factory output increased 0.9% y/y following a 0.7% rise in 2016.

Prices in the metals sector increased 4.4% during the last four weeks and have risen nearly one-third y/y. Steel scrap prices rose 2.4% during the last month and by one-half y/y. Copper scrap prices increased 1.0% over the last four weeks and rose 39.7% during the last year. Aluminum prices gained 2.2% in one month and by 26.7% y/y.  In the miscellaneous group, prices gained 1.6% during the last month and rose 16.0% y/y. Framing lumber prices jumped 7.3% in recent weeks, but were up nearly one-quarter y/y. Prices for structural panels firmed 1.5% in the last month and rose 42.9% y/y. Natural rubber costs declined 10.5% m/m and fell 2.0% y/y. Crude oil & benzene costs moved 1.2% higher in the last month (3.4% y/y). WTI crude oil prices strengthened 3.9% over the last four weeks to $50.40 per barrel, and were up versus the $43.61 low late in June. Prices for the petro-chemical benzene eased 1.5% during the last four weeks, but were up 19.4% y/y. In the textile group, prices eased 0.5% during the last month and rose 2.5% y/y. Cotton prices recently backpedaled 4.2% and have been fairly stable y/y. Burlap prices moved 1.3% higher over the last four weeks and worked 25.4% higher y/y.

Further price improvement may be coming. The current industrial output projection from the National Association for Business Economics (NABE) calls for a 1.9% increase in output during all of 2017 and a 2.3% 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 1.7 6.7 3.3 14.3 19.2 -16.3 -10.0
 Textiles -0.5 0.8 -1.2 2.5 2.8 2.2 -4.2
  Cotton (cents per pound) -4.2 2.3 -7.4 0.3 10.2 2.6 -24.2
 Metals 4.4 11.8 11.9 31.2 32.9 -27.8 -8.7
  Aluminum ($ per metric ton) 2.2 11.9 11.2 26.7 13.0 -19.2 9.4
  Copper Scrap (cents per pound) 1.0 14.5 16.8 39.7 17.3 -27.0 -12.0
  Steel Scrap ($ per ton) 2.4 10.2 1.0 50.4 74.5 -53.8 -18.6
 Crude Oil & Benzene 1.2 5.5 -3.5 3.4 20.4 -19.4 -26.5
  Crude Oil (WTI, $ per Barrel) 3.9 11.4 -5.0 -0.2 44.3 -35.8 -43.2
 Miscellaneous 1.6 7.9 3.3 16.0 21.7 -18.0 -6.7
  Framing Lumber ($ per 1000 board ft.) 7.3 10.3 6.3 22.9 12.9 -16.4 -1.6
  Natural Rubber (cents per pound) -10.5 1.5 -24.6 -2.0 89.4 -22.5 -32.3
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