Investment Executive Staff
The overall prices of Canada’s commodity exports hit a record high last month, powered by oil, the Bank of Nova Scotia reported today.
The bank’s monthly commodity price index of price trends in major exports jumped in April by 3.1% over March and by 25.8% over April 2003. “Commodity prices have spurted ahead by a substantial 13.5% since last December, boosted by this year’s more synchronized pace of global economic growth …. and the beginning of widespread raw material re-stocking in the United States, spurred by a recovery in manufacturing activity,” said Scotia Economics commodity specialist Patricia Mohr.
“China’s industrial activity was still advancing at an exceptionally strong 20.5% year-over-year pace in the three months ending in April,” she added.
West Texas intermediate crude oil has skyrocketed to an average of US$40.33 per barrel so far in May, Mohr said, surpassing the previous peak of US$39.50 in April 1980.
“While current inflation-adjusted prices are much lower than in the early 1980s, today’s record gasoline prices in the United States will likely spur some shift away from large, gas-guzzling sport utility vehicles,” Mohr stated.
“Auto and aircraft manufacturers will redouble efforts to boost fuel efficiency by shifting to lighter-weight materials such as aluminium, magnesium and plastics composites.”
Mohr added that geopolitical risks will likely keep oil prices unusually strong for most of this year, moderating to “a still strong $29-30 US in 2005, as stepped-up output from OPEC replenishes world inventories.”
Natural gas prices are underpinned by strong crude oil prices as well as expectations that a hot summer will increase American electricity demand.
In other commodities, global supply-demand conditions for coking coal have tightened dramatically, given last year’s 8.5% increase in world steel production, the Scotiabank report noted.
And it said pulp prices continue to strengthen amid strong Asian demand and improving European consumption.
Source: Investment Executive
Comments are closed.