Commodities poised for a comeback – by Eric Atkins and Carrie Tait (Globe and Mail – January 29, 2014)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

TORONTO and CALGARY — U.S. growth and a steadying Chinese economy are giving a boost to beaten-up commodities, slowing a multiyear slide that has weighed on Canada’s most important exports.

Commodity prices have been on a downward slope for the better part of three years, as limping western economies and a slowing China curbed demand for raw materials. More recently, however, signs of stability in key commodity-consuming regions have provided some optimism that the worst could be over.

The widely watched Thomson Reuters-Jefferies CRB index of commodities has climbed 4 per cent from its recent low earlier this month. Natural gas has been a standout among commodities, surging about 25 per cent since early December.

From zinc to copper and oil, a range of commodities is expected to find a floor this year as markets overcome recent hurdles and factories boost production to meet rising consumer demand, according to some analysts.

For Canada, an end to the commodity collapse is especially good news. Commodities and resource-based goods account for about 50 per cent of Canada’s merchandise exports and much of the resource-heavy Toronto Stock Exchange.

Few are predicting a return to booming demand for commodities. But a bottoming-out would be welcome news for producers.

Bank of Nova Scotia’s Patricia Mohr is calling for a “modestly positive” rise in the bank’s commodity price index in 2014. She says prices for the 32 commodities in the list are levelling out after a 5.4-per-cent drop last year.

Ms. Mohr is most bullish on zinc, a metal used to galvanize steel and found in everything from construction to furniture and automobiles. Record vehicle sales in 2013 are expected to continue gaining this year. As demand grows, the global zinc supply will shrink as the market absorbs the impact of the closing of four key mines, including two in Canada, Ms. Mohr argues.

“I think it’s going to be the next big play for the mining sector,” said Ms. Mohr, who forecasts zinc prices will rise from 87 cents (U.S.) a pound in 2013, to 98 cents this year and $1.30 by 2015.

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