Commodity prices to post double-digit gains in 2004: Scotiabank

Commodity prices, which have been on a tear for the last two years, will see double-digit gains in 2004 as well, according to Scotiabank economists.

Scotiabank's Commodity Price Index rose by 17 per cent to 18 per cent in each of 2002 and 2003 and the bank sees growth of at least 10 per cent in the "all-items" index next year as the world's economy rebounds.

"A faster, more synchronized pace of global growth bodes well for commodity prices next year particularly for base metals," Scotia Economics commodities specialist Patricia Mohr said.

"Though gains may slow, China's industrial activity will continue to expand at a rapid pace in 2004, boosting demand for many resource products," she said.

The bank's latest commodity report showed base metals strengthening in December, with copper prices at six-year highs and supplies tightening further in the first half of 2004. Nickel prices are at 14-year highs.

Mohr also sees coal prices moving higher in 2004. "Judging from recent international spot market sales, prices in Western Canada for contract sales to Japanese buyers are likely to move higher, when prices are renegotiated for the 2004 fiscal year," she said.