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VANCOUVER — Global commodity prices have tumbled to levels below the depths of the Great Recession, underscoring the widespread difficulties facing the global economy.
While crude oil’s price collapse has been in the spotlight, a wide range of other commodities are suffering as well, including natural gas, coal, iron ore, copper, grain and pulp and paper.
The commodity crash is the result of too little demand for raw goods now in plentiful supply after producers ramped up capacity in recent years in anticipation of steady global growth.
But trouble spots are everywhere. Commodity markets have declined during worldwide turbulence as the pace of growth in China continues to slow, Russia grapples with an imploding economy and ruble and Greece struggles through an economic crisis that Europe must solve. Oil’s big drop has hurt many energy-producing countries, including Canada, where low prices are hammering Alberta and reducing growth for Canada as a whole.
The Bank of Nova Scotia’s commodity price index fell to 100.9 points last month, a drop of 27.9 per cent since January, 2014. The index, which tracks a weighted basket of commodities including oil, metals, forest products and agriculture in U.S. dollars, has sunk through levels of the 2008-09 recession to reach its lowest point since January, 2007.
“It’s a lacklustre world economy. It’s a combination of slow demand growth and some capacity expansion,” said Patricia Mohr, vice-president and commodity market specialist at Scotiabank.
“China is a part of the story because the Chinese economy is slowing gradually,” Ms. Mohr said.
Another economic indicator also highlights weak conditions globally. The Baltic Dry Index, created in 1985 as a measure of global shipping, crumbled last week to a record low of 509 points. The BDI’s woes reflect the slump in the shipping industry’s prices to transport dry raw materials over 26 global routes.
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