Global| Feb 13 2017FIBER: Industrial Commodity Price Strength Outpaces Activity
by:Tom Moeller
|in:Economy in Brief
Summary
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 2.9% during the last four weeks, and has risen 23.9% during the last twelve months. This follows strength [...]
The Industrial Materials Price Index from the Foundation for International Business and Economic Research (FIBER) increased 2.9% during the last four weeks, and has risen 23.9% during the last twelve months. This follows strength during all of last year. The level of factory sector production, however, has barely changed over the same time periods.
Prices in the metals sector have been notably strong, rising 4.4% during the last month and by one-third y/y. Steel scrap prices surged 12.5% in the last month alone, capping a two-thirds increase y/y. Aluminum prices strengthened 4.1% during the last month and have increased 21.0% y/y. The cost of copper scrap rose 3.4% in four weeks as part of a 28.1% y/y gain. Zinc prices similarly surged 13.7% last month, and by roughly one-half y/y. Crude oil & benzene costs also have strengthened. WTI crude oil prices averaged roughly $53.00 per barrel so far this month, up by over three-quarters y/y. Prices for the petro-chemical benzene similarly rose more than three-quarters y/y.
In the miscellaneous group, natural rubber prices jumped 11.3% m/m and have more than doubled y/y. Continued strength in the housing market raised framing lumber prices moderately in recent months and 18.4% y/y. Prices for structural panels increased similarly in the last month and by 8.2% y/y. In the textile group, cotton prices moved 2.4% higher during the last month and increased by one-quarter y/y. Also showing strength were burlap prices which improved 8.1% during the last month and by 5.8% y/y.
The current industrial output projection from the National Association for Business Economics (NABE) calls for a 1.7% increase in production during all of 2017, following a 0.9% decline this year. During the last ten years, there has been a 52% correlation between the three-month change in prices and the change in U.S. industrial output. In addition, moderate growth in factory sector production worldwide is continuing.
Commodity price data can be found in Haver's DAILY, WEEKLY, USECON and CMDTY databases. The NABE forecast is in the SURVEYS database.
| FIBER Industrial Materials Price Index (%) | 1-Mth | 3-Mth | 6-Mth | 12-Mth | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|
| All Items | 2.9 | 9.6 | 11.2 | 23.9 | 19.2 | -16.3 | -10.0 |
| Textiles | 0.8 | 2.0 | 3.1 | 4.3 | 2.8 | 2.2 | -4.2 |
| Cotton (cents per pound) | 2.4 | 7.5 | 1.7 | 25.9 | 10.2 | 2.6 | -24.2 |
| Metals | 4.4 | 13.5 | 20.7 | 34.8 | 32.9 | -27.8 | -8.7 |
| Aluminum ($ per metric ton) | 4.1 | 5.1 | 11.2 | 21.0 | 13.0 | -19.2 | 9.4 |
| Copper Scrap (cents per pound) | 3.4 | 12.2 | 21.2 | 28.1 | 17.3 | -27.0 | -12.0 |
| Steel Scrap ($ per ton) | 12.5 | 58.4 | 35.6 | 66.9 | 74.5 | -53.8 | -18.6 |
| Crude Oil & Benzene | 3.8 | 15.7 | 14.6 | 41.0 | 20.4 | -19.4 | -26.5 |
| Crude Oil (WTI, $ per Barrel) | 1.1 | 19.0 | 24.5 | 83.3 | 44.3 | -35.8 | -43.2 |
| Miscellaneous | 2.9 | 9.7 | 8.5 | 24.2 | 21.7 | -18.0 | -6.7 |
| Framing Lumber ($ per 1000 board ft.) | 2.5 | 6.1 | -0.3 | 18.4 | 12.9 | -16.4 | -1.6 |
| Natural Rubber (cents per pound) | 11.3 | 59.2 | 66.2 | 124.6 | 89.4 | -22.5 | -32.3 |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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