The commodity price index of The Bank of Nova Scotia advanced 3.7% in November, 1994, representing an 8% increase over the same period in 1993. Surging metal and mineral prices, together with smaller gains in forest products and in oil and gas, offset a decline in agricultural prices.
The metal and mineral sub-index, up 6.4% from October, sat 38.4% ahead of one year ago. Economist Patricia Mohr says the sub-index has been driven by investment fund interest, tight global supply-demand conditions for copper, and a decline in aluminum inventories recorded by the London Metal Exchange (LME).
World-wide strength in base metals (in particular, copper and nickel) continued into December. However, Mohr cautions that the market continues to ignore near-record LME nickel inventories. More than 50% of stocks are believed to be held by financial institutions, anticipating a tighter supply-demand balance in 1995.
Mohr sees a strong North American auto sector and a recovery in European vehicle sales continuing in 1995, which are expected to help boost metal demand.
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).
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