Helped in part by rising base metal prices, the all-commodity price index of Scotiabank, on the rebound since the first quarter of the year, is riding slightly above levels of 12 months ago. In September, the all-items index rose by 0.9% from the previous month. The metals and minerals sub- index is up by 6.2% compared with September, 1989. (The oil and gas sub-index rose by 16.2% during the same period.)
While base metal prices surged in August and September, they slipped in October over concern that oil prices above US$30 per barrel would reduce world economic growth by exacerbating inflation and keeping interest rates up, said senior economist Patricia Mohr. “Rising oil prices will act as a tax on the consumer, slowing household expenditures, particularly on metal-intensive big ticket items such as cars and appliances,” she said.
Zinc, unlike some of the other metals, did not participate in the recent runup of prices. The metal is expected to receive support in the near future from continuing strong demand in Western Europe and Japan, and the startup of new galvanizing lines in these regions.
Next year, Mohr said, zinc is expected to move moderately lower as the North American economy weakens, mine capacity is expanded in Australia and Alaska, and office construction in the U.S. sharply declines.
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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