Metals sub-index moves up in July

The metal and mineral sub-index of The Bank of Nova Scotia’s commodity price index edged up in July alongside somewhat stronger prices for copper, aluminum, gold and silver. However, economist Patricia Mohr says the recent correction in precious metals, combined with renewed weakness in aluminum and a sharp drop in the nickel price, probably wiped out this gain in August.

London Metal Exchange (LME) aluminum prices were US53 cents per lb. at presstime, no higher than average Western world smelters but still above Canadian costs of US42-43 cents, Mohr points out. Western world primary aluminum consumption is expected to decline by about 1% in 1993, before rebounding next year.

A drop in auto production in Europe and Japan in the first half of 1993 caused an 80,000-tonne drop in aluminum consumption. This more than offset an increase of 50,000 tonnes in the North American auto industry. Aluminum exports from the Commonwealth of Independent States to the West have also increased substantially, and show no sign of decreasing. Mohr believes that, as with many other base metals, any improvement in the aluminum price throughout the balance of the year will depend heavily on further smelter closures.

The metal and mineral sub-index was up 1.5% in July from June, but off by 15.5% from a year ago. The all-items index declined by 0.1% in July to a level 4.7% below that of a year ago.

The all-commodity index tracks export prices of various Canadian commodities, which are weighted according to their 1984 export values (except crude oil, for which the value of net exports is used).