Economy
October 14, 2016
Producer Price Indexes of Sheet Steel, Aluminum, Plastic and Transportation
Written by Peter Wright
On Friday this week the Bureau of Labor Statistics (BLS) released its series of producer price indexes, for more than 10,000 goods and materials. For an explanation of this program see the end of this piece. The latest release this week reported results through September. We run this analysis every three or four months to give readers an opportunity to become aware of any changes in the competitive position of steel against other materials and rail vs truck transportation. The PPI data are helpful in monitoring the price direction of steel and steel products against competing materials and products.
As far as we at SMU can tell from comparison with known transaction prices, these PPI are a reasonable representation of the real world though there may be a lag between what the BLS reports and spot prices for steel products. We have also concluded that the actual index values of the PPIs of different products cannot be compared with one another because they are developed by different committees within the BLS. We believe that this data is useful in comparing the direction of prices in the short and medium term but not the absolute value.
