There was good news for the oil sector in Scotiabank’s Commodity Price Index released August 22, as prices climbed to their highest levels since mid-2008.
According to the report, Western Canadian Select (WCS) heavy oil prices rose to more than US$90 per barrel, up from US$75 per barrel last quarter. The report states that prices will remain at US$90 per barrel for the rest of the month.
Brent oil prices (the global standard) hit $109 per barrel in mid-August, a four-month high.
Lumber prices also rose, as Western Spruce-Pine-Fir lumber prices jumped from US$297 per multiple-foot-board measure (MFBM) in June to US$312 MFBM in July and US$328 MFBM in mid-August.
Metals and minerals prices, however, have been less positive.
Sulphur prices dropped from US$123 to US$65 per tonne in response to weak demand from Chinese fertilizer producers.
The contract price for Western Canadian metallurgical coal bound for Asian markets fell US$172 per tonne in 2013’s second quarter to US$145 in the third quarter.
“China will likely overtake Japan as the world’s top coking [metallurgical] coal importer in 2014,” the report states.
“Lower coal prices have recently triggered significant mine output cuts in western Australia and a delay in the final development stage of Teck Resources’ (TSX:TCK.A) Quintette coal project in B.C.”
Copper and zinc both enjoyed small gains, as copper increased from US$3.13 to US$3.28 per pound and zinc to US$.88 from US$.83 per pound.
U.S. soybean prices, while still ahead of the long-term average of US$8.73 per bushel, fell to US$13.09 per bushel – a drop of more than 23% from this time last year.
“While it is too early to say that commodity prices have bottomed, the correction since April 2011 could be largely over later this year,” said Patricia Mohr, Scotiabank vice-president of economics and commodity markets, in the report.
“The downturn since the spring of 2011 has been linked to an austerity-led recession in the southern euro zone, a sub-par U.S. economic recovery and new mine supply coming on stream in a lacklustre global economy.
“The euro zone’s real GDP increased by 1.1% annualized in 2013’s second quarter, ending six consecutive quarters of contraction, and signs point to a moderate pick-up in the United States.”
