Decline in metal prices felt by commodity index

“Industrial metal prices moved down in February and March from high levels in January, although trends have been mixed,” bank economist Patricia Mohr writes.

“Investors have become more cautious in light of a moderate increase in London Metal Exchange (LME) inventories, rising U.S. interest rates and prospects for slower U.S. economic growth by mid-year.”

Supply-demand fundamentals are still tight for most metals and Mohr thinks it is too early to assume a sustained decline. Supply disruption in Chile and Peru could easily move copper and zinc prices higher, she points out. The metals and minerals index is still 27% higher than it was in February, 1987.

Firming oil and gas prices during the month pushed up the oil and gas index, and forest products prices were up slightly. Grain prices fell. Despite the decline in the all- items index, commodity prices remain above fourth-quarter levels.

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.

]]>