Bank economist Patricia Mohr says that despite the decline from January’s peak, first-quarter results for the all-items index are the highest for the current business expansion.
Reflecting the decline in industrial metal prices is “a small, intended reduction of metal inventories by U.S. manufacturers and distributors,” Mohr reports. “Speculative demand for metals also has eased, alongside concern that rising interest rates will slow U.S. economic growth,” she added.
Nickel prices dropped because stainless steel inventories have been chopped at U.S. distribution centres following the introduction of large surcharges by steel mills to cover high nickel prices. Mohr also reports that U.S. steel producers are starting to use less nickel in stainless steel to try to cut costs.
Prices of aluminum recently strengthened after tumbling from their summer, 1988, peak of $1.65(US) per lb. The supply side has been helped by the moves of U.S. producers to reactivate mothballed facilities. Demand for aluminum remains steady.
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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