Scotiabank Commodity Price Index Down in September for Second Consecutive

Scotiabank Commodity Price Index Declines for Second Consecutive Month in September

  • WTI no longer a true benchmark for Alberta light synthetic crude oil.
  • Copper prices rebound from an over-sold position in early October.  Inventories are modest in China. 

TORONTO, Oct. 28, 2011 /CNW/ – Scotiabank’s Commodity Price Index, which measures price trends in 32 of Canada’s major exports, fell by 1.1 per cent month over month (m/m) in September, the second consecutive monthly decline. The All Items Index has retreated by 6.2 per cent from the near-term high last April, just prior to the advent of financial market concern over sovereign-debt challenges in the Eurozone.

“The commodity price correction has been mild compared with the 40 per cent plunge in the second half of 2008,” said Patricia Mohr, Vice-President, Economics and Commodity Market Specialist at Scotiabank. “While exchange-traded commodity prices declined sharply in early October, prices for oil, copper and the grains have rallied back in recent weeks on optimism that measures would be implemented to shore up the Eurozone financial system and bolster liquidity, culminating in a broad agreement on October 27.”

Nevertheless, a number of commodities not traded on exchanges (e.g. coking coal and iron ore) will likely be adjusted down in October, when quarterly contract prices are re-negotiated – dampened by uncertainty over global economic conditions and somewhat slower growth in China. The contract price for Western Canada’s premium-grade hard coking coal will decline from US$315 per tonne (FOB Vancouver) to a still lucrative US$285 in October. While prices may recede further in early 2012, the medium-term outlook for premium-grade hard coking coal remains favourable. Only 35 per cent of China’s domestic coal reserves are premium grade, while China requires 50 per cent for use in its larger blast furnaces.

The Oil and Gas Index inched ahead in September (+0.7 per cent m/m). The gain reflected a surprising increase for both light crude oil in Edmonton and Hardisty Heavy crude in Alberta – the two prices used in the Scotiabank Commodity Price Index — despite a slight decline in WTI oil.

“The price of WTI oil at Cushing, Oklahoma, the pricing point for the NYMEX contract, is no longer as relevant a marker as it once was for light synthetic crude oil from the Alberta oil sands,” noted Ms. Mohr.

WTI oil prices edged down from US$86.34 per barrel in August to US$85.58 in September. Oil prices are particularly sensitive to sentiment on the global economic outlook, falling as low as US$75.67 on October 4, before rebounding strongly to US$93 on October 27 on news of the Eurozone plan and a pick-up in U.S. third-quarter GDP growth (+ 2.5 per cent from a mere 1.3 per cent in the second quarter). However, WTI oil prices continue to trade at a wide US$20 discount to Brent — a better benchmark of world oil prices. WTI prices at Cushing, Oklahoma have been dampened by rising volumes of crude oil from the Alberta oil sands and the U.S. Mid-continent to Cushing in the face of onward pipeline constraints to refining centres in the U.S. Gulf Coast.

In contrast, the price of light synthetic crude oil (SCO) from Alberta (upgraded bitumen) has averaged US$103 per barrel in 2011 YTD – a US$9 premium over WTI oil. While this partly reflects upgrader outages in the Alberta oil sands, it also reflects a trend towards pricing SCO off its cracking parity with competing, higher-priced crude oil (such as Light Louisiana Sweet) in U.S. Midwest refining centres.

In September, the Metal and Mineral sub-component lost significant ground (-2.5 per cent m/m). Widespread declines in base metals and lower silver prices more than offset flat potash prices and gains in gold, sulphur, uranium and cobalt (a steel alloying agent).  LME prices for copper – the bellwether for base metals – dropped from US$4.10 per pound in August to US$3.77 in September and a low of US$3.08 in early October, before surging back to US$3.65 on the 27th.  Prices remain exceptionally profitable, yielding a 60 per cent profit margin over average world break-even costs including depreciation.

“Copper prices were over-sold in early October, given prospects for a supply deficit in the fourth quarter, that is, global demand will exceed refined metal supplies,” concluded Ms. Mohr. “China stepped up its purchases in early October recognizing bargain prices, pulling down LME stocks in South Korea. At the height of concern over Eurozone prospects, traders appear to have focused their profit-taking on copper, as well as nickel, given its comparatively large margin over costs and where the bulk of long positions probably resided.”

Scotia Economics 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.

For further information:

Patricia Mohr, Scotia Economics, (416) 866-4210,
Patty Stathokostas, Scotiabank Media Communications, (416) 866-3625

Scotiabank Toronto Waterfront Marathon Highlights

The Scotiabank has proudly announced highlights of the Scotiabank Toronto Waterfront Marathon in their press release dated October 16,2011. But, before you read it, here is an exclusive MetroActive bird’s eye video of the race as it passes by the Pinnacle buildings along the waterfront.

Now for the press release.

Canadians Coolsaet and Gillis qualify for London Olympics at 2011 Scotiabank Toronto Waterfront Marathon

Toronto’s premier running event raised more than $3.5 million for 164 local charities

TORONTO, Oct. 16, 2011 /CNW/ – Today was a spectacular day for Canadian pride at the 2011 Scotiabank Toronto Waterfront Marathon (STWM), with Canadian runners Reid Coolsaet and Eric Gillis qualifying for the London Olympics. More than 22,000 runners took to the streets in windy conditions, raising more than $3.5 million for 164 local charities.

Coolsaet and Gillis, his training partner at Speed River Track Club in Guelph, ON, finished third (2:10:55) and fourth (2:11:28) respectively at STWM, meeting the Canadian Olympic standard and ensuring their spots on the 2012 Olympic Team. Coolsaet’s time was the fastest time ever run by a Canadian on Canadian soil and the second fastest time ever for a Canadian over the classic 42k distance. Gillis, who met the qualifying standard by merely one second, previously represented Canada at the 2008 Beijing Olympics in the 10,000m.

Kenya’s Kenneth Mungara won the overall men’s title with a time of 2:09:51. Ethiopia’s Shami Dawit narrowly lost a thrilling sprint to the finish line, also being timed in 2:09:51 for second. The women’s race was equally exciting. Despite battling a tough headwind over the last seven kilometres, Ethiopia’s diminutive Koren Yal, equaled the course record of 2:22:43 defeating fellow Ethiopian Mare Dibaba by 42 seconds to claim the top prize. Yal’s performance was the ninth fastest women’s marathon run in the world so far this year.

“This was a remarkable breakthrough day for Canadian marathoning,” said Alan Brookes, Race Director. “Over the past few years our IAAF Silver Label race has established itself as one of the best in the world and today’s times confirm that. Most exciting today is that our Canadians ran with the best in the world and punched their tickets to London. We’re thrilled and so proud of not only our elite athletes, but also the 22,000 other runners that collectively raised a record-breaking amount for charity.”

“I am extremely proud to report that the 2011 Scotiabank Toronto Waterfront Marathon has raised over $3.5 million for some incredible Canadian charities,” said John Doig, Senior Vice-President, Toronto Region, Scotiabank. “STWM is an amazing event where people from all over the world can run, cheer on loved ones, or raise money for charity. It’s a great combination of athleticism, philanthropy and community spirit.”

Marathon Highlights

Men’s Race – Kenya’s Kenneth Mungara was crowned Scotiabank Toronto Waterfront Marathon champion for the fourth consecutive year, with a finishing time of 2:09:51. Mungara previously broke the record for fastest time on Canadian soil at STWM in 2010 (2:07:57).

Women’s Race – Koren Yal, from Ethiopia, placed first in the women’s race (2:22:43) just ahead of fellow Ethiopian Mare Dibaba who came in second (2:23:25). Russia’s Silvia Skvortsova came third in 2:27:51.

Canadian Standings – Reid Coolsaet of the Speed River Track Club in Guelph, ON, led the Canadians with an overall third-place finish with an international-class time of 2:10:55, qualifying him for the 2012 Olympic Games. Also qualifying for the London Olympics is Reid’s clubmate Eric Gillis who finished fourth at 2:11:28. Particularly noteworthy is that six Canadians finished in the top ten in this world-class event.

Half-Marathon – Thomas Breitbach won the men’s half-marathon, with a time of 1:07:21, and Leslie Sexton took the women’s title with 1:16:32.

Milton, ON phenom, Ed Whitlock, 80, continued to re-write the record books, running 3:15:54 for a new M80+ age-group world record. The longstanding previous mark was 3:39 which Whitlock took down to 3:25 in Rotterdam in April before slicing down nine more minutes today at STWM.

Capping off an incredible event, 100 year-old Fauja Singh (India) is set to break the world record for the oldest person to complete a marathon with a finish time of 8:25:16.
The full list of results for the 22nd Scotiabank Toronto Waterfront Marathon is available at www.stwm.ca.

The Scotiabank Group Charity Challenge and Neighbourhood Challenge together surpassed the $3 million target with a total of more than $3.5 million as of press time. This remarkable achievement exceeds last year’s total of $2.54 million. In addition, Scotiabank will award $6,000 to the three charities with the most runners, the largest amount of pledges per runner and the most money raised in pledges.

Along the marathon course, 12 Neighbourhood Cheering and Entertainment stations encouraged the runners to the finish line as part of the Scotiabank Neighbourhood Challenge. To honour their exuberance and support, Scotiabank will award them a charity bonus of $6,000 for having the most people, best costumes, best entertainment, and above all, creating the most noise. This year’s challenge was the best-ever with tons of spectators and incredible costumes, with the final report on the winners being issued later this week.

About the Scotiabank Toronto Waterfront Marathon (STWM)

For the fourth consecutive year, the STWM has been awarded a prestigious Silver Label by the International Association of Athletics Federations (IAAF). This designation makes the STWM one of only five internationally recognized IAAF Label marathons in North America. In 2010, the STWM was ranked as 6th fastest marathon in the world, 3rd fastest women’s race in the world and holds the record for both the fastest men’s and women’s marathons on Canadian soil (2:07:58 run last year by Kenneth Mungara and 2:22:43 by Sharon Cherop equaled today by Koren Yal). The Scotiabank Toronto Waterfront Marathon attracts participants from over 50 countries and this year’s goal is to raise more than $3 million for 164 charities reached $3.5 million as of press time.

The Scotiabank Toronto Waterfront Marathon includes a 5km, half-marathon (21.1km), and full marathon (42.2km) run. For more information, please visit www.stwm.ca.

About Scotiabank

Scotiabank is committed to supporting the communities in which we live and work, both in Canada and abroad, through our global philanthropic program, ‘Bright Future.’ Recognized as a leader internationally and among Canadian corporations for our charitable donations and philanthropic activities, Scotiabank has provided on average approximately $44 million annually to community causes around the world over the last five years. Visit us at www.scotiabank.com.

Image with caption: “Eric Gillis (left) and Reid Coolsaet celebrate at the 2011 Scotiabank Toronto Waterfront Marathon (October 16, 2011) after qualifying for the 2012 London Olympics.

Image with caption: “Kenneth Mungara of Kenya wins his 4th consecutive Scotiabank Toronto Waterfront Marathon (October 16, 2011) with a time of 2:09:51.

Image with caption: “More than 22,000 runners take to the streets of Toronto for the 2011 Scotiabank Toronto Waterfront Marathon (October 16, 2011), raising more than $3.5 million for charity.

Image with caption: “British Sikh 100 year-old Fauja Singh completes the 42.2km 2011 Scotiabank Toronto Waterfront Marathon (October 16, 2011) with a time of 8:25:16.

For further information:

Julia Wall-Clarke, Narrative Advocacy Media
Tricia Soltys, Narrative Advocacy Media

Patty Stathokostas, Scotiabank Media Communications

Canadian Small Businesses Face Reality of Slower and Uneven Economic Growth

TORONTO, Oct. 13, 2011 /CNW/ – Canadian businesses of all sizes are likely to face challenging conditions in the months ahead, according to a report released today by Scotia Economics. Domestic prospects are being constrained by the much slower and uneven pace of economic growth in most advanced nations, amid increasing fiscal restraint and persistently high unemployment. Meanwhile, intensifying debt-related strains in the euro zone and the United States suggest that financial markets will remain volatile during this adjustment period, dampening business and consumer confidence.

“Small firms are particularly sensitive to domestic demand, so their ability to maintain momentum will depend in large part on the resilience of consumer and business expenditures,” said Adrienne Warren, Senior Economist, Scotia Economics. “We expect consumers to be cautious spenders for the time being, given high household debt loads and some recent softening in employment conditions. A more subdued outlook for housing and renovation activity will reinforce this outlook.”

However, household employment, income and spending trends will continue to have a distinct regional performance differential, with the commodity-sensitive areas benefitting from more buoyant conditions than those regions more reliant on non-resource exports to the established markets in the United States, Europe and Japan.

“While activity in Western Canada and Newfoundland and Labrador is being supported by continued strength in resource-related investments, Central and Maritime Canada’s heavier exposure to a slowing U.S. economy suggests relatively more moderate growth prospects for small and large businesses alike,” noted Ms. Warren.

The current environment favours firms whose products and services are geared to corporate customers over those that rely primarily on households. While businesses may become more conservative in new hiring and investment in the months ahead, corporate balance sheet strength provides considerable flexibility to maintain current expenditures. Small businesses also will continue to benefit from the ongoing buoyancy in resource-related activity.

According to the report, the best growth prospects for many small firms may lie in their ability to tap export markets, notwithstanding the near-term disruptions to global trade flows. The fast-growing emerging nations in Asia and Latin America in particular offer considerable growth potential. Exporters focused on the more traditional markets of theUnited States and Europe will undoubtedly be challenged by underlying weak demand and less favourable demographic trends.

“Beyond the adjustment to a more muted outlook for global demand over the near-term, small businesses must continue to adapt to broader longer-term shifts in the economic landscape,” concluded Ms. Warren. “Key issues facing small businesses include an aging population, rising immigration, skilled labour shortages, particularly in the construction trades, a high Canadian dollar, and high energy costs.”

Scotia Economics 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.

For further information:
Adrienne Warren, Scotia Economics, (416) 866-4315
Alex Koustas, Scotia Economics, (416) 866-4212
Patty Stathokostas, Scotiabank Media Communications, (416) 866-3625

BMO: Canadian Employment Steady, But Cooling – Poll Shows A Split In Workers Expecting a Raise or Promotion

TORONTO, September 9, 2011 – New job numbers released today showed there was a dip of 5,500 jobs in August and the unemployment rate edged up slightly to 7.3 per cent. According to Statistics Canada, in the past 12 months, employment has grown 1.3 per cent, with an increase of 223,000 jobs.

Following the release of these numbers, BMO issued the results of a survey conducted by Leger Marketing that found many Canadians are divided on how they view where they’re going in their job. More than one in four (28 per cent) said they’re expecting a raise or promotion in the next year. On the other hand, 23 per cent feel there is no possibility of a raise or promotion.

The 2011 BMO Labour Day Survey also found that 51 per cent are comfortable with their job security.

“While month-to-month dips shouldn’t be weighed too heavily, the underlying trend in Canada’s job market is beginning to cool. Full-time jobs were a highlight, again posting a solid gain of 25,700,” said Douglas Porter, Deputy Chief Economist, BMO Capital Markets. “However, private sector and goods-producing jobs fell in the month. As well, after a steady drop in the past year, the unemployment rate nudged up a tick to 7.3 per cent, although still down from 8.1 per cent a year ago. Even with the headline jobs setback, total hours worked did rise 0.3 per cent in the month, and are headed for a solid Q3 reading.”

According to BMO Economics, the high Canadian dollar is forcing many Canadian companies to increase their competitiveness by improving productivity.

“When it comes to productivity, there is still room for improvement as Canada lags behind the U.S. However, the good news is that Canadian companies have not been faced with the same pressure for job cuts as their U.S. counterparts,” said Cathy Pin, Vice-President, Commercial Banking, BMO Bank of Montreal. “Our research shows that while some feel the prospects in their current role are limited, there is an equal positive view as more Canadians feel they have a promotion or a raise to look forward to, and even more feel overall that they are secure in their job.”

Regional Survey Results – those who said they feel they are up for a raise or promotion:

Province/Region Percentage
Atlantic Canada 25%
Quebec 31%
Ontario 25%
Manitoba/Saskatchewan 35%
Alberta 30%
British Columbia 26%

Those who said they feel they’re in a dead-end job, and their company isn’t in a position to offer promotions, raises or bonuses:

Province/Region Percentage
Atlantic Canada 31%
Quebec 26%
Ontario 23%
Manitoba/Saskatchewan 17%
Alberta 24%
British Columbia 16%

The Leger Marketing survey was completed on-line from August 2nd to August 4th, 2011 with a sample of 1501 Canadians, 18 years of age or older. A probability sample of the same size would yield a margin of error of ±2.5 per cent, 19 times out of 20.

Canadian Dollar to Stay Above Parity Through 2011, Says BMO Economics

TORONTO, January 20, 2011 – The Canadian dollar flew above parity in the waning days of 2010, and is predicted to rise a few cents above the U.S. dollar by the end of 2011, according to Douglas Porter, Deputy Chief Economist, BMO Capital Markets.

“We believe that the Canadian dollar is likely to remain firm through 2011, with further gains still possible if commodity prices continue to forge ahead,” said Mr. Porter.

The strong dollar’s impact will vary across regions in Canada, and depending on the sector, will present some challenges and opportunities. Porter noted that manufacturing, tourism and some resource industries could face some difficulties as the loonie remains firm while utilities, broadcasters, sport teams and some retailers could benefit from a stronger currency.

“Parity with the U.S. dollar could represent a significant opportunity for Canadian entrepreneurs to enhance their productivity by upgrading or refreshing their equipment,” said Cathy Pin, Vice President, BMO Commercial Banking. “A strong Canadian dollar provides additional purchasing power when importing this equipment and purchasing supplies and inventory from the global market.”

For media enquiries:
Peter Scott, Toronto, PeterE.Scott@bmo.com, (416) 867-3996
Sarah Bensadoun, Montreal, sarah.bensadoun@bmo.com, (514) 877-8224
Laurie Grant, Vancouver, laurie.grant@bmo.com, (604) 665-7596