Metal prices return to 1991 lows

The metal and mineral sub-index of Scotiabank’s commodity price index dropped substantially again in October.

After improving earlier in the year, most base metals have returned to late 1991 lows. Copper remains profitable. But aluminum is well below Western World cash costs, while nickel and zinc prices are just covering production costs.

Economist Patricia Mohr cites several factors for the decline in nickel prices. One of the main factors is that Japanese nickel demand has dropped by about 30% in the first half of 1992 alongside a 10% decline in stainless steel output and inventory reduction. Nickel prices have also been hurt by a huge buildup of LME inventories, far exceeding previous experience, and rising shipments from the Commonwealth of Independent States (CIS) of both nickel metal and scrap.