Global Economic Research Patricia M. Mohr (416) 866-4210 Vice-President, Industry & Scotiabank Commodity Commodity Market Research Price Indices October 25, 2005 Scotiabank’s Commodity Price Index Climbs to New Record in September — Boosted by Hurricanes Katrina and Rita � Canadian natural gas export prices double over the past year. � Zinc — a rising star for 2006 — critically tight concentrate supplies push up prices. Uranium prices expected to reach US$40 by late 2006. � S cotiabank’s Commodity Price Index soared to a new peak in Scotiabank Commodity Price September — the second in as many months — and has doubled Index Climbs To New Peak since the October-2001 cyclical low. The All Items Index jumped by 9% Index: 1997=100 month-over-month — the third-biggest monthly gain on record (in data 160 New record high 160 in September back to 1972). The largest gain occurred in August 1973 in the lead-up to 140 2005 100.2% 140 the Arab oil embargo. This time, Hurricanes Katrina and Rita contributed to above cy clical low the surge by disrupting Gulf of Mexico oil & gas production, by damaging All Items 120 120 stockpiled building materials on U.S. Gulf Coast docks and through the 100 100 temporary suspension of zinc deliveries from the LME warehouse in 80 80 New Orleans. October 2001 60 60 The Oil & Gas Index soared to new heights in September , as Edmonton Bottom light crude oil, propane and natural gas export prices all climbed to 40 40 new records — offsetting a decline in Hardisty, Alberta medium/heavy crude oil. Canadian natural gas export prices have doubled over the 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 ——— past year and will move even higher in October (in lagged response to A trade-weighted U.S. dollar-based index of principal Canadian soaring Nymex prices, which reached a record US$14.22 per mmbtu on exports. Shaded areas represent U.S. recession periods. October 4 — up from US$7.37 a year earlier). Canada’s merchandise trade surplus in natural gas has more than tripled since the late 1990s, when prices were in the US$2 range, and will likely surpass C$40 billion this autumn Scotiabank Oil and Gas (the biggest single contributor to Canada’s overall trade surplus). The value Price Index of Canada’s natural gas exports (virtually all to the United States) now New Canada's T rade 360 360 Record exceeds Canada’s global exports of forest products (wood products and Surplus in Natural Gas (C$bn, annual rate) High pulp, paper & paperboards). 320 320 1999 11.0 2000 20.5 280 280 2004 27.4 The Metal & Minerals Index also climbed to a new record in September, 2005:Aug 39.0 240 240 its second of the past two months. Similar to recent patterns in the crude 200 200 oil market, major supply disruptions (either strikes or production 160 difficulties) have exacerbated already tight world supply/demand 160 conditions for copper cathodes and zinc concentrates — driving prices 120 120 higher . The Forest Products Index also strengthened last month, as lumber 80 80 and OSB prices snapped back from recent weakness — buoyed by prospects 40 40 Index: 1997=100 for rebuilding in the U.S. Gulf in the wake of Hurricanes Katrina and Rita (now followed by Wilma in Florida). Finally, the Agricultural Index edged 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 up alongside stronger wheat and barley prices. Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-4 Forest Product Index . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Industrial Price Forecasts . . . . . . . . . . . . . . . . . . . . . . . 4 Key Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 All Commodity Price Index . . . . . . . . . . . . . . . . . . . . . 5 Oil and Gas Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Industrial Commodity Index . . . . . . . . . . . . . . . . . . . . 6 Key Energy Prices . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Metal and Mineral Index . . . . . . . . . . . . . . . . . . . . . . . 6 Agricultural Index . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Key Industrial Metal Prices . . . . . . . . . . . . . . . . . . . . .7 Key Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 Technical Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Scotiabank Commodity Price Indices is available on: www.scotiabank.com, Bloomberg at SCOE and Reuters at SM1C
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