21 December 2011 17:59 [Source: ICIS news]
TORONTO (ICIS)--Canadian commodity prices rose 1.0% in November from October after three consecutive monthly declines, according to a survey released on Wednesday.
Toronto-based Scotiabank said November’s increase in its monthly index of 32 commodities was led by “a sharp rebound in oil and firmer base metal prices”.
Going forward, Patricia Mohr, Scotiabank’s commodity markets specialist, said that, in the first three months of 2012, “things may be a bit slow”.
However, by spring 2012, China’s commodity demand will probably have “rallied back”.
“China is hugely dominant is in the world’s materials market. They are now 50% of world steel production, which means they dominate iron ore and coking coal,” she said.
At the same time, China accounts for more than 40% of the global demand for copper, aluminium and zinc, Mohr said.
She added that oil prices remain at “very high levels – despite all the worries about eurozone economic activity”, because global oil demand and supply markets “are actually balanced for crude”.
“It [the crude oil market] is not in surplus, it’s in balance,” Mohr said.
Adding to oil prices are increased “geopolitical risks” because of Iran’s nuclear weapons programme. Sanctions against Iran could shut off that country’s 2.6m bbl/day crude exports, Mohr said.
Mohr forecast West Texas Intermediate (WTI) prices for 2012 in the $95/bbl (€73.1/bbl) to $100/bbl range, but because of the geopolitical risk, “this could turn out much higher”. Brent would also continue trading “very high” in 2012, at $108/bbl to $110/bbl, she added.
As for natural gas, Mohr said NYMEX prices were currently at a “secular bottom”.
Mohr expects a “snap-back” of gas prices towards the end of next year: “There could be some shut-ins, and then a snap-back, with prices moving back up to $4/MMBtu mark.”
($1 = €0.77)
Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy blog
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
Asian Chemical Connections