Latest on Pulp, up to $710 in NA and $720 in Japan
Copyright 2000 Canada NewsWire Ltd. ÿ
Canada NewsWire
June 23, 2000, Friday
SECTION: FINANCIAL NEWS
DISTRIBUTION: Attention Business Editors
LENGTH: 774 words
HEADLINE: Scotiabank Commodity Price Index edges down in May
DATELINE: TORONTO, June 23
BODY:
ÿÿÿWith significant decreases in the Forestÿ
Products and Agricultural Indices, Scotiabank's Commodity Price Index, whichÿ
measures price trends in Canada's major exports, declined by 0.2% in May --ÿ
the second consecutive monthly fall.ÿ
ÿÿÿÿ"The Forest Products Index fell in May as softer lumber and orientedÿ
strandboard (OSB) prices more than countered the further phase-in of priceÿ
increases for newsprint and supercalendered A paper," said Patricia Mohr, Vice-ÿ
President and commodities specialist, Scotia Economics. "Western Spruce-Pine-ÿ
Fir 2x4 lumber prices for B.C. interior and Alberta producers declined toÿ
US$272 in May, retreating even further to US$268 in mid-June -- well below theÿ
first quarter average of US$331."ÿ
ÿÿÿÿLower prices for building products reflect the beginning of a fall inÿ
U.S. housing starts alongside tighter monetary policy and higher mortgageÿ
rates. U.S. housing starts eased to 1.59 million units annualized in May --ÿ
still solid -- but well below the exceptional 1.73 million average of theÿ
first quarter.ÿ
ÿÿÿÿIn contrast, newsprint and pulp prices will continue to climb. Newsprintÿ
manufacturers in North America are expected to quickly implement another US$50ÿ
increase to US$610 per tonne in September when Fall advertising campaignsÿ
begin to heat up. Pulp producers have also announced a US$30 hike for northernÿ
bleached softwood kraft in July, taking prices to a lucrative US$710 in theÿ
United States and Europe, and US$720 in Japan.ÿ
ÿÿÿÿThe Agricultural Index also retreated in May as lower cattle, canola andÿ
lobster prices more than offset slight gains in wheat, barley and hogs.ÿ
ÿÿÿÿ"The Canadian Wheat Board's asking export price for No.1 grade wheatÿ
edged up to US$149 per tonne in May and June, but is similar to levels a yearÿ
ago," added Mohr. "However, some price improvement is expected in the new cropÿ
year. Northern China is experiencing a drought and will boost its importsÿ
modestly in 2000-01."ÿ
ÿÿÿÿThe Oil & Gas Index rallied strongly in May. West Texas Intermediateÿ
crude oil prices surged to US$28.81 in May and US$32.19 per barrel in mid-ÿ
June, after temporarily easing to US$25.54 following OPEC's decision to boostÿ
output in April.ÿ
ÿÿÿÿ"At its June 21st meeting, OPEC decided to lift output by a furtherÿ
708,000 barrels per day in July in a bid to keep prices below US$30. However,ÿ
the increase only validated current production levels, which are already closeÿ
to the new targetted level," said Mohr.ÿ
ÿÿÿÿAccording to Mohr, only two OPEC countries -- Saudi Arabia and Kuwait --ÿ
have significant excess capacity, with Algeria, Nigeria and Indonesia nowÿ
bumping up against constraints. Spare capacity in Iran and Venezuela is veryÿ
limited, though substantial investment in the next several years couldÿ
potentially alleviate constraints. Control of OPEC is increasingly in theÿ
hands of Saudi Arabia, with Kuwait usually following the Saudi lead -- aÿ
development which points to the continuation of high oil prices and recordÿ
cash flow in Canada's oil patch.ÿ
ÿÿÿÿNatural gas prices across North America have also moved to a higher planeÿ
- pushed up by strong oil prices, expansion of U.S. gas-fired merchant powerÿ
generation and tight supplies. Natural gas accounted for 52% of Canadian oilÿ
and gas exports last year.ÿ
ÿÿÿÿThe Metal and Mineral Index also rebounded in May as stronger base metalÿ
prices offset weaker precious metals and another decline in spot uraniumÿ
prices. However, LME nickel prices have eased back to US$3.63 per pound in mid-ÿ
June from US$4.60 in May, as a major Canadian producer renegotiated its labourÿ
agreement in Sudbury without work stoppages.ÿ
ÿÿÿÿ"Nevertheless, supply and demand conditions for nickel remainÿ
favourable," said Mohr. "LME inventories have been halved since late 1999.ÿ
Nickel-containing stainless steel output in the Western World should climb byÿ
7.3% this year and 4.8% in 2001, after a 5.6% gain last year."ÿ
ÿÿÿÿScotia Economics, part of the Scotiabank Group, provides clients with in-ÿ
depth research into the factors shaping the outlook for Canada and the globalÿ
economy, including macroeconomic developments, currency and capital marketÿ
trends, commodity and industry performance, as well as monetary, fiscal andÿ
public policy issues.
ÿ
CONTACT: Patricia Mohr, Scotia Economics, (416) 866-4210; Jane Shannon, Public Affairs, (416) 933-1795
LANGUAGE: ENGLISH
LOAD-DATE: June 24, 2000 |
