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Economy in Brief

FIBER: Industrial Commodity Prices Are Strengthening
by Tom Moeller  February 12, 2018

The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) rose 2.7% during the last four weeks following a 6.7% gain throughout all of last year. A 2.3% December-to-December increase in factory sector production prompted the increase, along with strengthening manufacturing sector activity abroad.

Showing the greatest increase were prices in the metals sector which increased 3.6% during the last month and 17.6% y/y. Strength was led by a 10.7% one-month rise in steel scrap prices which increased 14.9% y/y. Aluminum prices rose 1.0% over four weeks and by nearly one-quarter y/y. Copper scrap prices eased modestly last month, but also rose roughly one-quarter y/y. Amongst other metals, lead prices improved 1.0% during the last month and 11.3% y/y, while zinc prices gained 4.0% m/m during the last four weeks and 26.1% y/y. Prices in the miscellaneous group improved 6.0% last month and 1.0% y/y. Framing lumber prices jumped 10.3% last month and were up by one-third y/y. Prices for structural panels increased 12.8% last month and rose 32.9% y/y. Natural rubber costs also increased 4.9% last month, but still were off 42.2% y/y. To the downside were prices in the textile group which fell 3.7% last month, but rose 1.5% y/y. Cotton prices strengthened 6.9% m/m, but only by 1.2% y/y. Burlap prices improved 2.7% over the last four weeks and 12.6% y/y. Also easing were prices in the crude oil & benzene group by 0.1% last month (+5.1% y/y). Weakness was led by just a 0.4% m/m increase (19.4% y/y) in crude oil prices to an average $63.11 per barrel. Prices declined to $59.20 on Friday. Benzene prices fell 1.1% in the last four weeks and by 8.3% y/y.

Further price improvement may be coming. The current industrial output projection from the National Association for Business Economics (NABE) calls for a 2.3% 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 continues to improve.

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 2.7 4.3 6.3 6.1 6.7 19.2 -16.3
 Textiles -3.7 2.3 2.2 1.5 3.0 2.8 2.2
  Cotton (cents per pound) 6.9 10.6 8.3 1.2 9.8 10.2 2.6
 Metals 3.6 8.5 13.3 17.6 18.6 32.9 -27.8
  Aluminum ($ per metric ton) 1.0 3.3 11.7 20.8 26.0 13.0 -19.2
  Copper Scrap (cents per pound) -1.5 2.2 9.8 20.1 29.3 17.3 -27.0
  Steel Scrap ($ per ton) 10.7 24.3 20.8 14.9 16.8 74.5 -53.8
 Crude Oil & Benzene -0.1 4.5 14.7 5.1 8.1 20.4 -19.4
  Crude Oil (WTI, $ per Barrel) 0.4 11.0 28.2 19.4 10.9 44.3 -35.8
 Miscellaneous 6.0 2.1 0.0 1.0 -0.5 21.7 -18.0
  Framing Lumber ($ per 1000 board ft.) 10.3 11.6 12.6 31.4 20.0 12.9 -16.4
  Natural Rubber (cents per pound) 4.9 4.4 -5.8 -42.2 -29.6 89.4 -22.5
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