Base metal prices ease off slightly

After climbing to more than a 4-year high in January, The Bank of Nova Scotia’s metal and mineral index has drifted lower over the past four months.

Base metal prices are taking a breather after last year’s run-up, more than offsetting slightly stronger precious metal prices.

According to economist Patricia Mohr, interest in U.S. investment funds has waned, and recent consumption trends suggest that 1995 will be a year of low growth, followed by a moderate pickup in 1996.

Mine and smelter reactivations and considerable new mine development will gradually add to world supplies of metals, especially copper.

Metal fabricators in the U.S. and Japan are currently paring inventories built up in early 1995 as a precaution against rising prices. North American motor vehicle production is being reduced by 12% in the second quarter from a record pace earlier in the year.

This cutback reflects softer sales, after last year’s runup in interest rates, and an attempt to prevent a large buildup of car and light truck inventories. A slowdown in residential construction is also taking its toll on copper plumbing tube and building wire demand in both countries.

Though still at a high level, metal consumption has also eased in Western Europe. On a more positive note, a surge in global business investment will continue to underpin demand for copper, nickel and zinc.