The commodity supercycle: myth or reality? Part 5

Patricia Mohr, vice-president economics at Toronto-based Scotiabank (BNS-T) is also a proponent of the bullish case for commodities. She believes that commodities are indeed in a supercycle. Mohr’s economics department compiles the Scotiabank commodity price index, and she points out that the index has registered three consecutive highs in January, February and March, despite a slowdown in the U.S. economy and slow commodity demand in the developed G7 countries. Although prices of some commodities such as nickel, zinc and uranium have retreated, there are still a number of commodities with tight supply conditions such as oil, coking coal, copper, potash, sulphur and iron ore.

Mohr says that commodity demand from emerging economies continues to be strong, so commodity prices will continue to be firm. Although she acknowledges that base metal prices may come down to some extent as new supply hits the market, she believes that price levels will remain high. The reason is that commodity prices will have to be at levels that justify the development of new mines, or else these new mines will be deemed uneconomic and will not be built. Therefore Mohr concludes that it is unlikely that commodity prices will come down to 1990’s price levels.


Be the first to comment on "The commodity supercycle: myth or reality? Part 5"

Leave a comment

Your email address will not be published.


By continuing to browse you agree to our use of cookies. To learn more, click more information

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.