Canadian international merchandise trade

Canada's merchandise exports to the world increased for the sixth time in the last eight months in August, thanks in large part to soaring natural gas prices.

Energy imports also jumped to reach a record high of $3.0 billion as demand for gasoline peaked in August.

The anticipated effect of approaching storms on production in the Gulf of Mexico contributed to price increases for energy in August. Hurricane Katrina, which hit in the final week of August, succeeded in pushing prices higher as several natural gas processing plants and oil refineries along the Louisiana coastline were damaged.

In total, Canadian companies exported merchandise worth nearly $38.0 billion, a 1.5% increase from July. On the other hand, imports slipped 0.4% to just over $32.4 billion as the rise in energy imports failed to offset declines in all other sectors.

That left Canada's trade surplus with the world at nearly $5.6 billion, up from a revised $4.9 billion in July. The trade surplus with the United States rose to nearly $8.9 billion while the trade deficit with countries other than the United States narrowed to $3.3 billion.

Canada's natural gas exports hit $3.3 billion in August, up from $2.9 billion the month before. The record high for natural gas exports ($4.4 billion) was set in January 2001. August's increase was the result of rising prices, which offset a 4.6% decline in volumes. Exports of crude petroleum were up as well.

Imports from the European Union rose 2.7%, the result of a surge in gasoline imports. Merchandise imports into Canada fell from every major trading area except the European Union in August.

Exports: Natural gas posts big gains in August

Canada's exports increased in three key sectors in August: energy, agriculture and fishing, and the automotive.

Natural gas exports jumped 13.2% in August as supply uncertainty pushed up prices. The devastation of the Gulf Coast in the last week of August fuelled the climb as it disrupted natural gas supplies.

The jump in natural gas exports was accompanied by a 0.8% increase in exports of crude petroleum. Similar to natural gas, volumes of crude petroleum exports fell, and the prices spurred the gain. Crude oil prices reached US $66.80 per barrel by mid-August and hit US $70.85 per barrel on August 29 in the aftermath of Hurricane Katrina.

In agriculture, each major group increased except for the category of other unmilled cereals. Gains in canola and barley exports led the increase.

Shipments of live animals across the border soared 50.7% in August to $164.1 million. This was the highest level since April 2003, the month prior to the discovery of mad cow disease. While hog exports were up, exports of live cattle accounted for the vast majority of the increase in live animals. The American export ban on live cattle under the age of 30 months was lifted in mid-July.

Exports of automotive products were up 2.8%, led by an 11.0% increase in shipments of passenger autos and chassis. This rebound in passenger autos, widespread throughout the industry, follows lower-than-usual summer production levels.

On the down side, exports fell in the industrial goods and materials, and machinery and equipment sectors. Exports of metals and alloys were down 7.0% as a result of production shutdowns and labour strikes. Aluminum exports managed a 4.2% increase as capacity expansion occurred in the industry.

Metal ore exports soared 44.7% to a record high of $790.7 million. Prices for metal ores have been high throughout 2005. Additional demand from other Organisation of Economic Co-operation and Development countries fuelled the increase.

Exports of chemicals returned to usual levels in August, following a large shipment of uranium destined for the European Union which drove July exports up.

Lumber and sawmill products continue their downward spiral, falling 5.9%. This was the sixth consecutive decline for the commodity grouping. Lumber prices, which have plummeted since the May 2004 peak, are normally quoted in US dollars. The appreciation of the Canadian dollar against the American dollar has resulted in lumber producers receiving fewer Canadian dollars for their merchandise.

Imports: Demand for gasoline pushes energy products to record high

Imports slipped 0.4% in August, with small declines occurring in every sector except energy, where imports rose 7.7% to a record high of $3.0 billion.

An increase in imports of gasoline pushed petroleum and coal imports up 44.5%. Higher volumes accounted for two-thirds of the gain although rising prices played a role in the increased value.

In addition, imports of coal and other related products rose 12.6% to $358.0 million. Coal-fired power plants stepped up production to keep pace with increased demand for electricity.

Imports of automotive products fell 1.2%. Declines in imports of trucks and other motor vehicles, and passenger autos and chassis contributed equally.

Imports of industrial goods and materials fell 2.6%. Declines were widespread throughout the sector.

Imports of machinery and equipment were stable for the second consecutive month. This pause follows substantial growth during the first two quarters of 2005. Additional imports of machinery were demanded by industries such as oil and gas, mining, and transportation to fuel expansion activities.

Available on CANSIM: tables 228-0001 to 228-0003 and 228-0033 to 228-0046.

Definitions, data sources and methods: survey numbers, including related surveys, 2201, 2202 and 2203.

The August issue of Canadian International Merchandise Trade, Vol. 59, no. 8 (65-001-XIB, $15/$151) is now available. See How to order products. The publication includes tables by commodity and country on a customs basis. Current account data (which incorporate merchandise trade statistics, service transactions, investment income and transfers) are available quarterly in Canada's Balance of International Payments (67-001-XIE, $32/$100).

Merchandise trade data are available in PDF format on the morning of release.

For more information on products and services, contact Anne Couillard, (1-800-294-5583; 613-951-6867). To enquire about the concepts, methods or data quality of this release, contact Diana Wyman (613-951-3116), International Trade Division.