Potash, aluminum lead commodity exports in July

Tag : aluminum

As G7 economies try to pick themselves up from an economic slump,the world's emerging markets have carried the metal and miningsectors to new heights this summer, according to Bank of NovaScotia's July commodity price index report.
The performance of spot potash and aluminum led the pack ofCanada's 32 major exports to pull the price of commodities up by 4per cent from June to a new record high for the seventh month in arow.
“The strength of this upswing is a testimony to theremarkable growth of ‘emerging-market' demand this decade inthe face of significant supply constraints in many resourcesectors,” said Patricia Mohr, vice-president, industry andcommodity research at Scotia Economics and commodity marketspecialist in the commodity price index report.
The metal and mineral index was up 5.9 per cent from June,propelled by the price of potash soaring to $763 (U.S.) per tonnein July from $525 the previous month.
Ms. Mohr said the Beijing Olympic Games helped bring aluminumprices to $1.49 per pound – their highest level in twodecades. In full-out electricity conservation mode in the monthleading up to the Olympics, China cut back smelter production,which is very energy-intensive.
Startled by the record-high prices oil reached in mid-July, U.S.consumers have steadily reduced their consumption, which has led toan equally steady unwinding of prices, she said. The result is“comfortable” global supply and demand conditions foroil.
“Traders are focused more on softening economic conditionsacross the G7, a quick response by U.S. consumers to high oilprices…and stepped-up OPEC production,” she said in herreport.
She did note that this steadiness could be shaken if Russia stepsup military operations, which could trigger major world supplyrisks.
Natural gas consumption declined to $11.07 per mmbtu in July from$12.78 in June, but an even bigger drop is expected for August, asprices were as low as $8.28 at the end of the month. Whileelectricity demands usually surge in the hot summer months, Ms.Mohr said an unusually cool summer in the U.S. meantlower-than-usual use of natural gas to power air conditioners.
The only export sector that didn't post gains was the agriculturalsector – brought down by low wheat and canola prices in July– but Ms. Mohr's report showed optimism for a turnaround inperformance. Wheat prices fell to $399 per tonne from $426 in June,but seemed to be making a comeback at $409 per tonne in mid-August.
While demand for resources in developing economies such as Indiaand Brazil has translated into high prices for many Canadianexports, Ms. Mohr warned that the good times may not last for long.Her report predicted the slump G7 economies face will soon infectemerging economies, enacting a global economic slowdown.