Scotiabank commodity price index inches down

Oil & Gas Index continued to gain ground in August, the bank reported

September 30, 2013
by PurchasingB2B Staff

TORONTO—Scotiabank’s Commodity Price Index inched down by -0.1 percent month-over-month (m/m) in August, the bank reported. However, the All Items Index has edged up so far this year (1.2 percent over the previous eight months of 2012), largely reflecting a rebound in the Oil & Gas Index from last December’s low as well as a strong cyclical recovery in building material prices.

The Oil & Gas Index continued to gain ground in August, 0.4 percent m/m, 24 percent year-over-year (yr/yr).

“Slight gains in Alberta light and heavy crude oil and a big increase in propane prices at both Edmonton and Sarnia offset softer natural gas export prices,” said Patricia Mohr, Scotiabank’s vice-president of economics and commodity market specialist. “Western Canadian Select heavy oil (WCS) at Hardisty, Alberta climbed to US$90.90 per barrel—the highest level since mid-2008, when WTI oil prices were at a record (US$147.90)—just prior to the 2008-09 Great Recession. This price level is closer to the true, inherent value of heavy crude oil in international markets compared with the heavily discounted prices of only US$62.37 in 2013:Q1.”

Highlights in the report include:

  • Agricultural prices lose ground, as record US corn crop and record world wheat  crop push down prices;
  • However, base metal prices rally and spot iron ore and coking coal prices move higher, as Chinese steel mills restock ahead of the Fall construction season. China’s steel production now represents 50 percent of the world total; and
  • Stepped-up rail shipments of heavy crude will offset further delays to Keystone XL.