The metal and mineral sub-index of Scotiabank’s commodity price index suffered another sharp decline in November. After improving earlier in the year, the sub-index has fallen below the previous low in November, 1991.
Weak base metal prices reflect declining capital goods orders in Germany and Japan and an increase in shipments from the Commonwealth of Independent States to Europe.
Among key base metals, only copper remains profitable. Economist Patricia Mohr says that renewed buying by China and relatively low London Metal Exchange (LME) inventories are underpinning copper prices. However inventories will probably rise in early 1993, constraining prices. European output of wire and brass will be reduced
in January and February and
the sales outlook for telephone cable in Germany is poor.
Nickel and aluminum prices have steadied in December in response to production cuts at mines and smelters and a scheduled increase in first quarter North American motor vehicle output in 1993. However, record high LME stocks of aluminum, nickel and zinc will keep prices low through the first half of next year, Mohr says.
The metal and mineral sub-index was off 3.7% in November from October and off by 8.0% from one year ago. The all-items index fell by 0.6% in November to a level only 2.8% above a year ago.
The all-commodity index tracks export prices of a variety of Canadian commodities, which are weighted according to their 1984 export values, except crude oil where the value of net exports is used.
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