Metal prices improved in June but the all-items commodity price index of Scotiabank dropped slightly. Oil and gas and agricultural prices also rose, but were offset by a decline in the forest product sub-index.
Economist Patricia Mohr reports that economic conditions in G-7 countries remain mixed. A slow recovery in the U.S. is helping to push up resource prices. In Japan, however, the demand for base metals is contracting. In June, stronger copper, lead and zinc prices offset weaker sulphur, aluminum and nickel prices for a slight gain in the metals and minerals sub-index, which is down 1.6% from one year ago.
“The cyclical correction in base metals was less severe in 1990-91 than in the 1981-82 recession, partly due to a more moderate, less coincident downturn in G-7 countries,” Mohr writes.
“Industrial production only fell by 0.4% in the G-7 last year compared with a 2.7% decline in 1982.
“Though prices have been boosted in July by technical trading on the LME (particularly in zinc) and U.S. dollar depreciation, weakening conditions in Japan and Germany will probably act as a drag well into next year.”
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