The all-commodity price index of Scotiabank rose slightly in June, but the metal and mineral sub-index headed the other way as the price of gold dropped. The past few weeks have seen a rebound in the gold price, to around US$367 per oz. Bank economist Patricia Mohr said profit margins for most Canadian gold mining companies remain fairly good. The average cash production cost in Canada is less than US$245 per oz., with average break-even costs, including depreciation, closer to US$320.
Also easing in June but rebounding in July were copper prices. “In the first six months of 1990, Western world copper stocks fell to very low levels,” Mohr said. “While global demand has slowed, it is still growing and remains well above production.”
Consumption gains in continental Europe and the Far East have offset reduced demand for building wire and plumbing tube in the U.S., Mohr said. She added that copper supply conditions are expected to remain tight until the Escondida mine enters production next year in Chile.
Declines in metals and energy prices in June were offset by improved forest product and agricultural prices, Mohr said. The bank’s 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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