According to an economist who spoke at the recent CanaData Construction Industry Forecasts conference, oil is overvalued, cheap natural gas has caused some utilities to convert from coal and a rebounding US housing market should drive prices for steel and Canadian lumber.

Ms Dina Ignjatovic, economist for autos, commodities and other industries at TD Bank Financial Group, was one of seven speakers at this year's event.

The price of oil now is about USD 91 a barrel and that is overvalued, Ignjatovic said, adding demand for metals is expected to be strong in emerging markets such as India and China, but there was limited capital expenditure in resource projects.

Ms Dina Ignjatovic delivers her thoughts about commodities during CanaData. She said that "If you're investing in, say, a mine it doesn't just take a few months to develop. It takes years. With capital expenditures low, with projects delayed, it will take time for a lot of these projects to come back online."

CanaData was produced by Reed Construction Data Canada, publisher of DCN, and held at the Liberty Grand Conference Centre at the Canadian National Exhibition grounds in Toronto in September 2012.

Ms Ignjatovic discussed recent price fluctuations and future projections for 18 different items covered in the TD Commodity Price Index. She said that despite the debt problems faced by the United States and several European governments, the underlying drivers of commodity prices are generally positive.

She said that "I would say that is over valued, given where supply and demand is and prices should be in the USD 75 to USD 80 range." She attributed recent prices to geopolitical tensions, including the sanctions against Iran.

She added natural gas prices dropped below USD 2 per million BTUs this year, and should be USD 2.50 to USD 3 in the near term, which is low compared to historical norms.

Source - dcnonl.com

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