Commodity Price Index Down 2.6% m/m in June: Scotiabank

TORONTO, July 11, 2017 /CNW/ - The Scotiabank Commodity Price Index declined 2.6% m/m in June as industrial commodities fell, led by the Oil & Gas and Metals & Minerals sub-indices. Crude oil prices reached their lowest level of the year, below $43/bbl (WTI) in June and virtually all industrial metals posted quarter-on-quarter losses. Oil market fundamentals are still expected to tighten through 2018, though WTI price forecasts have been lowered to $51/bbl in 2017 and $53/bbl in 2018.

"Some of the declines reflected a true deterioration of fundamentals, as is the case with nickel, but we believe that the fallback in oil is an overreaction to an admittedly uninspiring string of high-frequency data," said Rory Johnston, Commodity Economist at Scotiabank. "We remain optimistic, however, and see most commodities gaining through 2017 and 2018 on the back of a global economy that continues to strengthen as well as a gradual reversal of U.S. dollar strength."

OPEC+ is expected to maintain production discipline, leaving the supply burden to the rest of the world. Outside OPEC+, the U.S. shale patch will provide the lion's share of supply growth while other nations will muddle through, feeling the brunt of the roughly trillion-dollar post-crash reduction in planned global industry investment between 2015 and 2020.

Other highlights:

  • OPEC+ compliance with the supply reduction agreement remains high and continued production discipline through the March 2018 extension is expected.
  • The natural gas outlook has slightly weakened on the risk that supply gains temporarily outstrip demand in the second half of 2017, and Henry Hub prices are now expected to average $3.10/MMBtu in 2017 and $2.95 in 2018.
  • Zinc's outlook remains promising and prices staged a mid-June comeback, rallying to roughly $1.25/lb from a year-to-date low of $1.10 reached earlier that month.
  • Nickel's fortunes have dimmed since last quarter and prices are now forecast to average $4.40/lb in 2017 and $5.00/lb in 2018.
  • Iron ore prices have fallen precipitously to around $55/t from a mid-February peak of $95/t.
  • Gold prices have firmed over the last quarter on the back of falling yields and a weaker dollar; the forecast has been updated to $1,225/oz in 2017 and $1,250/oz in 2018 to reflect this strength.

Read the full Scotiabank Commodity Price Index online at:

Scotiabank provides clients with in-depth research into the factors shaping the outlook for Canada and the global economy, including macroeconomic developments, currency and capital market trends, commodity and industry performance, as well as monetary, fiscal and public policy issues.

About Scotiabank

Scotiabank is Canada's international bank and a leading financial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacific. We are dedicated to helping our 23 million customers become better off through a broad range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. With a team of more than 88,000 employees and assets of over $921 billion (as at April 30, 2017), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges (NYSE: BNS). For more information, please visit and follow us on Twitter @ScotiabankViews.

SOURCE Scotiabank

For further information: For media enquiries only: Sierra Catalfamo, Global Communications, Scotiabank, (416) 933-1171,


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