SOURCE: Scotiabank


April 29, 2014 07:00 ET

Scotiabank Commodity Price Index Eases in March

TORONTO, ON--(Marketwired - April 29, 2014) - After a strong start to 2014, Scotiabank's Commodity Price Index slipped by 1.6% month-over-month (m/m) in March, but stayed 2.3% above a year earlier. The Oil & Gas Index led the decline (-5.5% m/m) -- after surging in January and February -- but remained 25.1% above a year ago. The report also features recent trends in international LNG pricing (liquefied natural gas) and the impact on proposed LNG projects in B.C.

"While LNG has been a lucrative trade, in recent years Asian buyers have been pressing to shift away from 'Oil-Indexed Contracts' -- preferred by B.C. project proponents -- to cheaper 'Henry Hub-based pricing', given low natural gas prices in the U.S.," said Patricia Mohr, Scotiabank's Vice President of Economics and Commodity Market Specialist. "This poses a challenge for B.C.'s 'greenfield' projects, which must compete with low-cost 'brownfield' developments on the U.S. Gulf (e.g. Sabine Pass) and in the Middle East (Qatar)."

Highlights in the report include:

  • Market anxiety over Russian-Ukraine tensions and supply outages in Libya has recently supported international oil prices, with Brent at US$109. Russia is among the world's top three oil producers, with output of 10.74 million barrels/day (mb/d) as of March 2014, second only to the U.S. at 11.33 mb/d; Saudi Arabia produced 9.57 mb/d in March, though its maximum capability is 12.4 mb/d.
  • Despite the recent impact of unfavourable weather on building activity, we believe the multiple-year recovery in U.S. housing starts will remain intact, lifting lumber prices to quite lucrative levels in 2014-15. 
  • Copper prices dropped as low as US$2.92 in mid-March, but rallied back to US$3.08 in late April. China's State Reserve Bureau has bought at least 300,000 tonnes of refined copper from bonded warehouses in Shanghai, likely believing that copper is approaching a cyclical bottom. 

Read the full Scotiabank Commodity Price Index online at:,,3112,00.html.

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