Scotiabank's commodity index rebounded in May after bottoming-out in April.
The index climbed 2.2% due primarily to increased spending by China. Despite the global recession, China's imports of refined copper and iron ore were at record levels during the first four months of 2009. China's industrial activity has re-accelerated in the past three months. It jumped 8.9% year over year in May as the country's huge infrastructure projects began to kick in.
The metals and mineral index rose 4.2% month over month in May with widespread gains in base metals, gold, silver and uranium. Spot uranium prices bottomed at US$40 per pound in early April and edged up to US$54 in mid-June. Copper prices also climbed to US$2.27 per pound in mid-June from US$1.99 in April, yielding a 44% profit margin over average world break-even costs, the report said. Prices rose to a near-term peak of US$2.39 June 11 on news that China's copper imports hit a new record high in May, the third record in recent months.
Copper prices have risen because of inventory restocking, which is expected to tail off by late summer. Scotiabank forecasts 2009's copper price to average US1.90 this year and US$2.30 in 2010.
The oil and gas index also rose 4.4% in May due to a jump in oil prices, which offset soft Canadian natural gas export prices to the U.S. The bank forecast 2009's oil at US$63 per barrel and US$90 in 2010.
The bank predicted that forest product prices will fall significantly this year from 2008 prices with kraft paper pulp, newsprint and lumber prices declining more than 20%.