The metal and mineral sub-index of Scotiabank’s commodity price index dropped substantially in September, which is contrary to the normal seasonal pattern. The decline in base metal prices continued in October.
“Market sentiment has turned bearish due to declining capital goods orders in Germany, plunging industrial output in Japan and the slowest U.S. recovery since the 1930s,” economist Patricia Mohr writes.
“Currency volatility and high interest rates have taken a toll on business confidence in Europe. LME inventories of aluminum, nickel and zinc have also increased rapidly since mid-summer.”
Mohr notes the decline in zinc prices and says that “Chinese brokers have been heavy sellers of zinc as margin calls have forced them to unwind their LME positions.” At the US50 cents-per-lb. level, Canadian zinc producers are covering their cash costs but not their full costs which include depreciation and interest expenses, she says.
The metal and mineral sub-index was off 2.4% in September from August but up slightly from one year ago. The all-items index was up 1.8% in September and ahead by 7.2% from one year ago.
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.
Be the first to comment on "Metal prices move lower"