TORONTO, ON - September 28, 2015 /CNW/ - Scotiabank's Commodity Price Index plunged by -10.5% month over-month (m/m) in August to 91.3, which puts it -13.9% below the April 2009 bottom during the last recession and the lowest level since early 2005.
"While many commodity prices including key base metals remain well above the 2008-09 recessionary lows, current commodity market weakness is broader based," said Patricia Mohr, Vice President of Economics and Commodity Market Specialist at Scotiabank. "The financial market turbulence in China touched off fears of a hard landing in August and opened up questions over the medium-term outlook for China as a growth market for raw materials -- especially for oil and metals.
"Our view is that monetary and fiscal policy stimulus will allow China's economy to grow by 6.8% in 2015 (close to Beijing's 7% target), though growth will slow to 6.4% in 2016. Medium-term, China's potential to significantly lift world raw material demand will remain intact, even as it transitions to a consumer-and service-led economy.
"In September, the Fed's decision to delay its first interest rate hike and a renewed decline in U.S. oil-targeted drilling activity, after a massive short covering rally on the NYMEX late last month, has lifted West Texas Intermediate (WTI) oil back to US$45."
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Read the full Scotiabank Commodity Price Index online at: http://www.scotiabank.com/ca/en/0,,3112,00.html.
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