Industrial product prices fall 0.5% in July August 28, 2009
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Falling oil and coal prices drove Canada’s Industrial Product Price Index down 0.5 per cent in July, reversing the 0.5 per cent increase registered in June, Statistics Canada reported Friday.
The index is down seven per cent from the peak reached in August 2008.
Lower oil prices also dragged the Raw Materials Price Index down by 3.8 per cent in July following increases of 6.2 per cent in June and 2.2 per cent in May.
Oil and coal prices fell 5.2 per cent in July after three consecutive monthly increases, including a jump of 10.8 per cent in June.
The Industrial Product Price Index reflects the prices that producers in Canada receive as their goods leave the plant gate and does not include costs such as indirect taxes and transportation. The Raw Materials Price Index reflects the prices paid by manufacturers for key raw materials, many of which are set on world markets, and includes goods that are not produced in Canada.
Excluding oil and coal, the industrial price index was unchanged after declining for three consecutive months. Lower prices for fruit, vegetables, feed products, motor vehicles and other transport equipment were offset by higher prices for lumber and other wood products, as well as primary metal products.
The materials price index has fallen 34.4 per cent since July 2008, the largest year-over-year decline since the index was created in 1977. The decline is mainly attributable to a 49 per cent drop in the price of mineral fuels.
Abundant oil means stable gas prices this summer, says energy regulator May 30, 2009
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Last week, the national average price of gas crossed the $1 level for the first time this year.(Darryl Dyck/Canadian Press)
With oil prices slated to remain stable, consumers can be assured that the cost of gas this summer won’t approach last year’s record highs, says Canada’s national energy regulator.
The National Energy Board released its outlook for the summer Thursday, predicting U.S. crude oil prices of between $50 and $60 US a barrel.
“The current economic situation, combined with the high inventories of both oil and natural gas, will continue to put downward pressure on energy prices heading into summer,” the NEB said in a release.
‘Canadians will find that the price of gas will not go as high as it did last summer.’—Gaétan Caron, NEB
The NEB cautioned that uncertainties remain, and that the price of oil could be pushed up by production cuts mandated by the Organization of Petroleum Exporting Countries (OPEC) or unexpected spikes in demand.
But after meeting in Vienna on Thursday, the 12 members of the oil cartel said they intend to maintain production levels at their current rate.
“Canadians will find that the price of gas will not go as high as it did last summer,” said NEB chair Gaétan Caron.
Prices cross dollar threshold
In Canada, average gas prices hit $1.36 last July as crude oil hit a record high of $147 US per barrel, according to Calgary-based consulting firm MJ Ervin. Then the global economic downturn took hold and Canadian prices cratered to an average of 74.9 cents a litre in December.
Gas caps
All four Atlantic provinces regulate retail gasoline prices. In Nova Scotia, New Brunswick, and Newfoundland and Labrador, regulatory boards set maximum prices every two weeks in response to market conditions. In P.E.I., retailers must justify proposed gas price increases.
Prices have since begun to inch up, reaching an average of 88.8 cents a litre in April. And according to MJ Ervin’s figures, the average price of gas crossed the $1 level for the first time last week.
But the NEB forecast underlines what most market watchers have suggested — there won’t be the same spike in prices in 2009 that occurred a year ago. Demand for oil remains sluggish. The Paris-based International Energy Agency is forecasting a three per cent drop in global oil consumption in 2009.
OPEC predicts global oil demand will drop two per cent this year, despite talk of economic recovery in China and hints of the return of some growth to North America sometime in the next few months.
Benchmark crude for July delivery was up 13 cents Thursday at $63.58 US a barrel after earlier getting as high as $63.93.
The NEB also predicts there will be an adequate supply of electricity for consumers over the summer, citing expanded transmission capacity in Ontario and Quebec, and between New Brunswick and the United States.
The regulator suggests natural gas prices will average between $3.20 US and $4.20 per thousand cubic feet.
The charts below illustrate how gas and oil prices have fluctuated since January 2008. For each month, we took the average national price of a litre of gasoline and compared it to the cost of a barrel of oil.
The first chart breaks down monthly changes in the cost of each component of a litre of gasoline.
The second chart tracks the percentage change in the average national price of a litre of gasoline and a barrel of oil.
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Oil prices could shoot beyond 2008 peak by 2012: Saudi Arabia May 28, 2009
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Oil prices could soar above previous records within “the next two or three years” because of a lack of exploration capacity now, said the Saudi oil minister in Rome on Tuesday.
Saudi Arabia’s Minister of Petroleum and Mineral Resources Ali al-Naimi said current low prices are discouraging the search for new oil in the ongoing recession. Energy prices, however, can jump quickly with the greater demand associated with an economic recovery, he said.
“We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions. However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two to three years another price spike similar to or worse than what we witnessed in 2008,” al-Naimi said in prepared remarks at the two-day summit in Italy.
Saudi Arabia, the world’s largest oil pumper, has already said the country has no intention of adding to its 2009 capacity of 12.5 million barrels a day.
In the summer of 2008, oil prices hit a record of $147 US a barrel but since have plummeted along with the world’s economic prospects.
Now, crude prices are hovering around the $60 barrel level, not sufficiently high to entice companies to start searching for new reserves, experts said.
No give
Oil values can react very quickly to higher demand in a time when there is little capacity to increase production, according to the International Monetary Fund.
“Changes in underlying economic fundamentals can lead to larger oil price changes in the short term than in the medium term,” said John Lipsky, the IMF’s first deputy managing director, speaking at the same conference also on Tuesday.
Consumer demand, whether it is companies looking for increased manufacturing capacity or individuals taking cross-country drives, does not drop very quickly in response to higher oil prices.
This economic concept, known as inelastic demand, often results in prices continuing to rise swiftly until the usage growth slows, economists noted.
In addition, oil has become vulnerable to various supply disruptions but not ones related to weather or civil unrest, Lipsky said.
Analysts have pointed to the lack of refining capacity as one persistent problem in getting oil from the ground into cars and plants.
No new capacity
Both Lipsky and al-Naimi said the crisis is not coming this year or even in 2010. Instead, the International Energy Agency estimates that oil and gas exploration and production will fall 21 per cent in 2009.
For sector watchers, however, the lack of spending in the short run will cause energy consuming nations difficulties in the longer term.
“The saga of North American oil is well underway. The current financial crisis, triggered in part by the global oil crisis, is only serving to mask the decline of oil supply in this region,” said Gregor MacDonald, an independent oil and gas analyst in April.
Back then, MacDonald predicted that oil could reach $200 a barrel by the time of the 2012 U.S. presidential election.
Light, sweet crude for July delivery traded at $61.82 a barrel, up 15 cents, in the afternoon session Tuesday. Oil reached as low as $59.53 earlier in the morning.
Low pulp prices drag Domtar to Q1 loss of $45M US May 3, 2009
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Three-month trading for Domtar
Domtar Corp. posted a first-quarter loss of $45 million US Friday, blaming a sharp drop in pulp prices and higher costs for energy and chemicals.
The Montreal-based forestry company, which reports in U.S. dollars, said it lost nine cents per share, compared with a profit of $36 million, or seven cents per share, in the same quarter last year.
Sales were $1.3 billion, down from $1.7 billion a year earlier.
“We continue to face a very hostile environment in pulp, with prices reaching cyclical lows,” CEO John Williams said in a news release.
“Our people have responded remarkably well to the mandate of right-sizing the organization, improving its operating performance and reducing procurement costs and discretionary spending,” he said.
Domtar recently announced cuts among its executive ranks as well as efforts to streamline its management committee.
The company said market conditions in all its lines of business remain challenging, although the rapid decline of paper volumes in recent months has been abating.
It said pulp prices have been stabilizing in some overseas markets, but inventories remain high.
Domtar, with 11,000 employees, is North America’s largest integrated manufacturer and marketer of uncoated freesheet paper, which is used in copiers and fax machines. It also produces lumber and other special and industrial wood products.
Shares of Domtar closed up one cent to $2.16 on the TSX.
With files from The Canadian Press
New housing prices drop for 3rd straight month February 12, 2009
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Contractors’ selling prices for new homes decreased 0.1 per cent between November and December, Statistics Canada reported Wednesday.
The drop was the third straight monthly decline.
New housing prices decreased by 0.7 per cent in Saskatoon in December with some builders in that city reporting lower labour costs.
Prices declined by 1.3 per cent in Calgary and 0.3 per cent in Edmonton.
Statistics Canada reported that prices increased by 0.2 per cent in Ottawa-Gatineau in December, while they stayed the same in Toronto and Oshawa, Ont., Quebec City, Montreal and Vancouver.
In year-over-year comparisons, the new housing price index rose by 0.4 per cent in December, a slower pace than the 0.7 per cent advance noted in November.
Prices rise in St. John’s
The largest year-over-year increase was noted in St. John’s, at 24.4 per cent, while Regina came second at 21.7 per cent.
In Quebec, the 12-month growth rate was 5.4 per cent, while Montreal prices increased by 4.6 per cent.
Compared with December 2007, contractors’ selling prices for new homes were 4.5 per cent higher in Ottawa-Gatineau and 1.9 per cent higher in Toronto and Oshawa.
In Saskatoon, prices rose 0.9 per cent year-over-year. Statistics Canada said the number confirms that there is a trend of “deceleration” in the city.
Statistics Canada reported that Edmonton, Calgary, Vancouver and Victoria all posted year-over-year declines, with Edmonton posting the highest decline at ?8.2 per cent.
Year-over-year decreases were ?4.3 per cent in Calgary, ?2.3 per cent in Vancouver and ?2.9 per cent in Victoria.
The agency said “slow market conditions” were responsible for the declines in Alberta.
U.S. home purchases jump in December, but at fire-sale prices January 27, 2009
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Existing home purchases jumped unexpectedly in December in the United States, but mainly because sellers were dumping their houses at rock-bottom prices, according to figures released Monday.
The number of older homes that changed hands in the last month of the year rose 6.5 per cent from November, said the National Association of Realtors.
December became the first month in the last quarter of the month to show a gain in the number of existing home sales.
Still, however, that positive news was tempered by the fact that more almost half of those sales were at distressed prices, implying that sellers needed to dump their homes.
“There remains a significant downward distortion in the current median from a large number of distress sales at discounted prices, currently 45 per cent of transactions; the median is where half of the homes sold for more and half sold for less,” said the NAR in a press release containing the December figures.
Compared with December 2007, the number of existing home sales was down 3.5 per cent, and the median home price was off more than 15 per cent, slumping to $175,000 US.
By contrast, the average price for a Canadian home in December was off 11 per cent at $281,000 compared to the same month one year earlier.
Although the December numbers showed an increase in the United States, few analysts viewed the upwards trend as a sign that the housing market is recovering.
“The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal balanced conditions,” said Lawrence Yun, the NAR’s chief economist. “Buyers will continue to have an edge over sellers for the foreseeable future.”
Other experts see the plethora of bad news in terms of record mortgage foreclosures and rising unemployment as the dominant trend in the U.S. housing market.
“Mortgage delinquency and foreclosure rates soared to record highs in Q3,” said Ed Kashmarek, economist with Wells Fargo & Co., a bank that specializes in the housing market, in a December commentary.
“This, along with the horrendous job losses in Q4, suggests a housing recovery may be quite a way off.”
House prices expected to slip nationally: Royal LePage January 7, 2009
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The Canadian real estate market is headed for a “correction” and not a crash this year, with average prices across the country expected to decline by three per cent, Royal LePage said Tuesday.
The real estate firm said in its annual forecast that the resale real estate market should see only “modest” price and unit sales corrections.
Market forecast Market Price change in 2009 (%) Forecast 2009 Price Price change in 2008 (%)Canada-3.0$295,000-1.1Halifax1.0 $234,3007.2Montreal-1.0$254,4004.3Ottawa0.0$291,0006.6 Toronto-4.0$364,0000.8Winnipeg4.0$204,90020.5 Regina6.0$243,30038.6 Calgary-1.0$402,000-1.9 Edmonton0.0$333,000-1.7 Vancouver-9.0$540,1004.0
The national average house price is forecast to dip from $304,000 in 2008 to $295,000, while transactions are projected to fall to 416,000, a decline of 3.5 per cent.
Despite the cooling trend, the firm said some price and activity gains are anticipated in a few provinces.
“While Canada’s housing market is anticipated to continue to move through a period of adjustment over the next six months, we should expect modestly lower home prices, not a U.S.-style collapse, which was brought on by a structural failure of the entire American credit system,” said Phil Soper, the president and chief executive of Royal LePage Real Estate Services.
“Most consumers are not aware that nationally, Canadian housing market activity peaked in 2007 and has been adjusting lower since. We are well into this inevitable cyclical correction,” Soper said.
Royal LePage said that in some mid-sized cities, such as Regina and Winnipeg, where home prices remain below the national average, prices are expected to increase moderately this year.
The most significant decreases are forecast for Canada’s most expensive city, Vancouver, which has experienced above-average price increases for most of the decade.
Markets in cities in Ontario that are reliant on the manufacturing sector are projected to experience greater-than-average declines in prices and activity, while the markets in Montreal and Ottawa are expected to remain stable, with relatively flat prices.
Oil prices rise, then fall on global tension January 5, 2009
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Oil prices rose and then fell in morning trading Monday as analysts shifted views on which global hot spot would affect commodity markets more in the coming months.
Oil prices popped by $1.15 US a barrel to $47.45 in early market action as commodity watchers assessed the Israel-Gaza conflict, the Ukrainian natural gas dispute with Russia and recent tension in Nigeria as factors that would reduce crude supplies.
Quickly, however, the U.S. dollar began to rise Monday as traders viewed the same factors as reasons to dump the ruble and other non-North American currencies, and buy the American greenback.
That sentiment eventually drove down oil prices by $1.66. Thus, by mid-morning, a barrel of oil for February delivery had lost 51 cents, slipping to $45.83.
Still, analysts feel that swirling international tension will result in a short-term rise in the commodity’s price.
“With Israeli troops going into Gaza, that just heightens fears of the possibility of a wider Middle East conflict,” said Ken Hasegawa, an energy analyst with broker Newedge in Tokyo.
“Prices will likely continue to rise in the short term.”
Political instability boosts prices
Three international situations have prompted analysts to take the view that oil prices will rise in the coming weeks.
In the Middle East, Israel’s December military action against the Hamas organization in the Gaza strip has analysts speculating about further tension between other Middle Eastern governments, many of whom produce oil, and the Israeli government.
In addition, a contract dispute has led to the government-owned energy company in Russia cutting gas supplies to Ukraine. Those reductions in turn have resulted in less natural gas flowing to the Czech Republic and Turkey with the possibility of other countries getting caught in the Russian-Ukrainian crossfire.
Finally, a separatist group in Nigeria has threatened to bomb that country’s main pipelines, a move that could limit oil supplies from the region.
U.S. dollar safe haven?
The same international disputes, however, also have experts believing that the American dollar is a better safe haven than the euro, British pound or some other currency.
The U.S. dollar rose more than two per cent against the euro in Monday trading.
Since oil is priced in U.S. dollars, a rising greenback means you can buy the same barrel of black gold for fewer American dollars, essentially cutting oil prices.
In addition, investors often sell oil, gold or another commodity if they believe the value of the U.S. currency is set to rise. Many analysts believe the currency should rise against the overvalued euro in coming months.
With files from the Canadian Press (more…)
Gas prices reach 4-year low across Canada December 25, 2008
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Holiday motorists are getting a break this season as the price of gas dips to a four-year low across much of the country.
The average price of gas stands at 74.9 cents a litre, according to Calgary-based consulting firm MJ Ervin’s weekly survey, released Tuesday. That’s down 1.4 cents from a week ago.
“I don’t think in the decades of data that we’ve been looking at pump and crude prices, we’ve seen such a dramatic drop in such a short period of time ever,” said Michael Ervin, president of MJ Ervin & Associates Inc.
The last time Canadians saw prices this low was December 2004, when gas averaged 74.5 cents a litre.
Ottawa motorists are enjoying the cheapest gas at 65.8 cents a litre, while pumps in Labrador City are charging 93.5 cents a litre.
Prices in New Brunswick, which were around 72.2 cents a litre on Wednesday, were poised to get even cheaper at midnight. That’s when the province’s energy board sets its prices each week.
“Prices look like they’re going to go below 70 cents a litre in many New Brunswick communities, practically a Christmas miracle here,” said CBC News’s Robert Jones.
Gas prices are tied to the price of crude oil, which dipped Wednesday to less than $37 US a barrel. Analysts say they expect U.S. crude oil reserves will also keep a low ceiling on prices.
Some Canadians argued Wednesday that prices should be even cheaper, considering the low cost of crude.
“Eight months ago, the price they were paying for crude oil was way higher than this, and we were paying 55 cents a litre — so we should be paying at least 48 to 52 at the most,” Toronto motorist Edwin Dawson told CBC News.
New housing prices climb at slowest pace since 1999 December 13, 2008
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New home prices increased 1.5 per cent on an annual basis in October, the smallest increase recorded since October 1999, Statistics Canada said Thursday.
At the same time, the apartment vacancy rate in October fell to 2.2 per cent from 2.6 per cent, the Canada Mortgage and Housing Corporation said in a separate report Thursday. The CMHC said the gap between home ownership and renting in part increased demand for rental units.
According to Statistics Canada report, prices for new homes declined 0.4 per cent between September and October 2008 ? marking the first monthly decrease observed since September 1998, the federal agency said.
Regina and St. John’s led the country with annual increases of 22.8 per cent and 22.3 per cent respectively ? though the rate of increase was down from record highs reached earlier this year.
Year-over-year increases were also recorded in the following cities:
Ottawa (4.3 per cent).Toronto and Oshawa (3.0 per cent).Quebec City (5.8 per cent).Montreal (4.8 per cent).
Contractors’ selling prices for new homes in Edmonton declined 7.7 per cent in year-over-year comparisons ? the city’s largest decline recorded since May 1985. Calgary saw a yearly decrease of 1.6 per cent, the city’s largest year-over-year decline since November 1991. Year-over-year prices also fell in Vancouver by 0.4 per cent and in Victoria by 1.1 per cent.
According to the CMHC report, the urban centres with the lowest vacancy rate were Kelowna at 0.3 per cent and Victoria, Vancouver and Regina all at 0.5 per cent. Windsor at 14.6 per cent, St. Catharines-Niagara at 4.3 per cent and Oshawa at 3.2 per cent had the highest vacancy rates in the country.
The highest average monthly rent for two-bedroom apartments was highest in Toronto at $1,625. Vancouver at $1,507 and Calgary at $1,293 followed.
