TORONTO, Dec. 20, 2018 /CNW/ - Commodities were on the Naughty List in 2018, a year of broad declines mixed with severe volatility. As a group, industrial and precious commodities are down 12% year-to-date. Some beat the trend, but even the top three performers—Henry Hub natural gas (+22%), palladium (+19%) and WCS crude (-4%)—are far from inspiring.

Losses have been much more pronounced, led by AECO natural gas (-43%), lumber (-28%) and cobalt (-24%).

It was also an exceptionally volatile year. Lumber prices moved from +45% in May to -28% today, while WCS shifted from bull market (+68%) to bear market (-61%) to more-or-less neutral (-4%).

Nice List:

• Henry Hub Natural Gas (+22%): cold weather and extremely low inventories helped push the Louisiana-based natural gas benchmark, the primary price referenced in North America, to the top spot in 2018.
• Palladium (+19%): steady demand and years of supply deficits have eroded inventory levels and propelled palladium to the status of most-valuable precious metal, beating out gold for the first time since 2002.
• Canadian Heavy Crude (-4%): WCS had a rough year but level prices ended more or less neutral for 2018 (-4%), helped by a dramatic improvement in differentials to US benchmarks but weighed down by the generally poor performance of global crude prices

Naughty List:

• AECO Natural Gas (-43%): AECO gas underperformed significantly in 2018 as midstream infrastructure constraints added to the challenge presented by cheap and surging US shale gas, with year-to-date AECO losses surpassing 90% on multiple occasions.
• Lumber (-28%): Canadian rail bottlenecks eased and brought more supply to the US market just as US housing market conditions began to deteriorate, breaking the pull run that had brought lumber prices to all-time highs this past spring.
• Cobalt (-24%): a weaker Chinese auto market coupled with robust growth in Chinese cobalt hydroxide production capacity has resulted in a domestic glut, bringing prices back down off their prior highs.

Scotiabank Economics provides in-depth commentary on economic, financial market, and policy developments, both domestically and internationally.

Read the full December 2018 Scotiabank Commodity Price Index online here.

To access all Scotiabank Economics research, follow our new twitter account @ScotiaEconomics or visit www.scotiabank.com/economics.

About Scotiabank
Scotiabank is Canada's international bank and a leading financial services provider in the Americas. We are dedicated to helping our 25 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 97,000 employees and assets of $998 billion (as at October 31, 2018), Scotiabank trades on the Toronto (TSX: BNS) and New York Exchanges (NYSE: BNS). For more information, please visit www.scotiabank.com and follow us on Twitter @ScotiabankViews.

SOURCE Scotiabank