A small drop of 0.5% in Scotiabank’s all-commodity price index was recorded for February; on an annualized basis, the index fell by 5.3% for the month. A decline in base metal prices contributed to the overall fall. The all-items index is down by 12.1% compared with a year ago. Economist Patricia Mohr is predicting an increase in the index in March for the first time since last October on the basis of a strong rebound in base metal prices.
“Despite slower demand growth, supply disruptions affecting copper, lead and zinc have kept these markets tight,” Mohr writes. “U.S. manufacturers took advantage of lower prices in January and early February to add to inventories, after a sharp drawdown last year.”
The lead price on the London Metal Exchange rose to a 10-year high in mid-March. Declining inventories led to a supply squeeze of the metal. Also, zinc prices benefited from increased consumption in Europe; global concentrate supplies of the metal are reported to be tight.
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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