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Economy in Brief

FIBER: Industrial Commodity Prices Continue to Improve
by Tom Moeller  January 8, 2018

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 2.4% during the last four weeks following a 6.7% during all of last year. Recent price improvement came as U.S. factory output increased 2.3% y/y through November following little change in 2016.

Prices in the metals sector increased 6.5% during the last month, and rose 21.2% y/y. Strength was led by a 12.3% one-month rise in steel scrap prices which improved 16.8% y/y. Aluminum prices increased 10.2% over four weeks and one third y/y. The cost of copper scrap gained 7.7% over the last four weeks and 29.2% during the last year. Amongst other metals, lead prices improved 1.3% during the last month and 26.2% y/y, while zinc prices rose 5.6% during the last four weeks and 30.8% y/y. Prices in the crude oil & benzene group strengthened 1.5% last month, and gained 8.0% y/y. This rise was led by a 6.8% m/m increase (14.5% y/y) in crude oil prices to an average $61.15 per barrel, the highest level since December 2014. Benzene prices fell 5.1% in the last four weeks, but rose 14.3% y/y. In the textile group, prices increased 1.2% last month, and rose 2.5% y/y. Cotton prices strengthened 6.9% m/m and by roughly the same amount y/y. Burlap prices improved 1.0% over the last four weeks and 14.6% y/y. Prices in the miscellaneous group nudged 0.3% higher last month, but slipped 0.8% y/y. Framing lumber prices eased 0.7% in recent weeks, but remained up nearly one-quarter y/y. Prices for structural panels were little-changed last month, yet rose 17.6% y/y. Natural rubber costs rose 1.5% last month, but still were off nearly 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 1.9% increase in factory 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 2017 2016 2015
All Items 2.4 0.0 6.1 7.1 6.7 19.2 -16.3
 Textiles 1.2 2.3 2.5 2.5 3.0 2.8 2.2
  Cotton (cents per pound) 6.9 13.9 13.4 6.5 9.8 10.2 2.6
 Metals 6.5 2.7 13.9 21.2 18.6 32.9 -27.8
  Aluminum ($ per metric ton) 10.2 6.2 17.0 31.4 26.0 13.0 -19.2
  Copper Scrap (cents per pound) 7.7 10.7 22.2 29.2 29.3 17.3 -27.0
  Steel Scrap ($ per ton) 12.3 0.6 10.8 16.8 16.8 74.5 -53.8
 Crude Oil & Benzene 1.5 11.2 16.6 8.0 8.1 20.4 -19.4
  Crude Oil (WTI, $ per Barrel) 6.8 21.3 33.1 14.5 10.9 44.3 -35.8
 Miscellaneous 0.3 -8.8 -1.8 -0.8 -0.5 21.7 -18.0
  Framing Lumber ($ per 1000 board ft.) -0.7 -0.7 9.1 20.6 20.0 12.9 -16.4
  Natural Rubber (cents per pound) 1.5 -6.6 -4.9 -32.4 -29.6 89.4 -22.5
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