TORONTO – The Scotiabank Commodity Price Index rebounded in August, rising 3.1 per cent from July, thanks largely to stronger oil prices and the early signs of a recovery in the U.S. housing market.
Scotiabank said oil and gas prices led gains with a 11.2 per cent move up in the month, boosted by political tensions in the Middle East and sharply lower output in the North Sea due to maintenance and strikes.
Prices for forest products were also 2.3 per cent higher as Western Spruce-Pine-Fir 2×4 lumber prices jumped to US$310 per thousand board feet in August, their highest levels since May 2006.
“After a challenging environment since 2008, linked to a prolonged and sharp downturn in U.S. housing, lumber and OSB producers, as well as medium-density fibreboard and particleboard manufacturers, will enjoy a substantial recovery in earnings in 2013,” said Patricia Mohr, commodity market specialist at Scotiabank.
The report suggested that Western SPF 2×4 lumber prices will improve from an average of US$285 per thousand board feet in 2012 to US$315 in 2013 and US$350 in 2014.
The improved outlook came as the Standard & Poor’s/Case Shiller index for July suggested home prices in the U.S. rose, helped by greater sales and fewer foreclosures.
U.S. home prices rose 1.2 per cent in July, compared with a year earlier, according to the index. The U.S. report also said all 20 cities tracked by the index showed month-to-month increases between June and July.
Sawmill closures in Canada and the United States since 2007 as well as fewer logging contractors, trades people and truckers in the building materials industry will create challenges in meeting higher demand, the report said.
“The near-term outlook for OSB — used primarily in flooring and roofing in residential housing, but also in commercial construction — is even more compelling than lumber,” Mohr said.
“Capacity re-starts will be needed in 2013, recently spurring announcements by Georgia Pacific and Arbec Forest Products, involving a mill in Miramichi, N.B. Limited OSB supplies for sub-flooring triggered panic buying and a spike in prices in August. “
Meanwhile, the metal and mineral index slipped 2.4 per cent in August as weaker base metal, iron ore and uranium prices more than offset strength in gold.
The agricultural index dropped 1.2 per cent for the month on lower wheat and barley prices that offset cattle prices and higher prices for salmon and Atlantic coast lobster.