After a one-month decline in July, average prices of Canada's 32 major export commodities rose 3.5% in August, according to Scotiabank's commodity price index released Tuesday.
The index climbed 6.7% above the cyclical low in April and rallied relatively quickly compared with previous downturns due to an unusually rapid recovery in industrial metal prices.
Patricia Mohr, vice-president of economics and commodity market specialist at Scotiabank said, "Base metal prices have already returned to profitable mid-cycle levels, a development normally taking several years following the end of a global downturn and a testimony to the resiliency and growing importance of China."
China's imports of copper, zinc and nickel were at record levels through the first half of 2009 in the midst of a deep global recession, the report said.
Scotiabank's metals and minerals index led August's commodity price gains, surging 8.1% with widespread gains in base and precious metals and steel alloy prices. Increases in these commodities offset declines in potash, sulphur and uranium.
Copper prices have more than doubled from a low of US$1.26 per pound on December 24, 2008 to a peak of US$2.94 per pound on August 28. Mohr said copper will continue to outperform other base metals given under investment in new capacity during the last cyclical peak between 2007 and 2008.
Scotiabank's forest product index rose 2.4% in August as a late-summer pick up in U.S. building material prices and stronger pulp prices offset further weakness in newsprint and super-calendered paper. A weak U.S. dollar, especially against the Euro, and strong demand in China is lifting international pulp prices with NBSK pulp delivered to the U.S. rising from US$700 per tonne in July to US$730 per tonne in August.
Prices have since risen to US$770 per tonne in September, the highest price since November 2008. With higher prices, pulp production is restarting at mills on Vancouver Island, the report noted.