Metals prices weaken bank commodity index

A drop of 3% in October from the preceding month was reported by Scotiabank for its all-commodity price index. Contributing to the decease was a 6% tumble in October in metals prices. “Base metal prices have fallen as evidence accumulates that U.S. economic activity is weakening,” writes senior economist Patricia Mohr. “The market is also concerned that higher international oil prices will act as a tax on the consumer, slowing household expenditures for metal-intensive products such as cars.”

Mohr says metal prices remain at profitable levels for most producers. The copper price, for example, is above US$1 per lb., with average cash costs hovering around US57 cents and break-even costs (including depreciation) around US73 cents in the non-communist world.

While copper demand remains strong in Japan and other Pacific Rim countries, orders have slowed in the U.S. and in Western Europe. Mohr foresees copper prices moving lower next year but outperforming other metals.

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.