Companies in British Columbia’s already struggling commodity sector were dealt another blow Monday in the sell off of stocks that sent global stock markets plunging.
The S & P/TSX composite index fell more than 700 points shortly after markets opened, but by mid-morning it had recovered some of those losses and was down by 240 points at 13,233 towards the end of trading.
That represents a 12-per-cent drop since the index’s high of 15,000 points in April, which puts it into correction territory. A drop of more than 10 per cent represents a correction.
And on the day, B.C.-based commodity producers, already experiencing slowing sales of their output, saw share prices follow.
As of midday, Teck Resources Ltd. saw its share price tumble 7.4 per cent to $7.69 on the TSX, but it dipped as low as $7.08 before rallying back. First Quantum Minerals Ltd. was down a similar 6.2 per cent to $6.35, but had fallen to $5.75 before recovering some of the loss. Goldcorp Inc. was down 6.4 per cent at $19.11.
“What we’ve seen, given the news that’s out in commodities, an already weak commodity market is getting weaker,” said Bryan Yu, senior economist with Central 1 Credit Union.
Yu said sliding demand in China’s slowing manufacturing sector has been the biggest factor in the drop in commodity prices that have hit B.C.’s commodity companies.
“So, sectors like coal, (which have) already been hit pretty hadrd, are not going to be rebounding anytime soon,” Yu said, with the same going for companies in copper and gold mining.
B.C.’s big forest companies fared better, but in recent months they have been shifting to take advantage of a strengthening U.S. housing market as sales to China have slowed.
Shares in West Fraser Timber Co. Ltd. were down almost three per cent to $50.11, but that represented a substantial recovery after falling more sharply to $45.03 at the open.
Canfor Corp. fell about 1.5 per cent to $20.02, but had dropped to as low as $19 per share at the start of trading.
The benchmark oil price dipped below the $40 a barrel mark, selling for around $38.82 in mid-morning trading. The last time the price of crude closed below the $40 point was in February 2009.
The loonie was at around 75.82 cents US in mid-morning trading. The last time the loonie closed below that level was in August of 2004