Commodity index shows decline

The metals and minerals sub-index increased but the all-items commodity price index of Scotiabank dropped in July by 1.4%, the index’s second consecutive monthly decline.

Higher base metal and gold prices in July were reflected in the improved metals and minerals sub-index, which is up slightly from the same time last year.

Economist Patricia Mohr says copper is being supported by heavy New York investment house buying in anticipation of a cyclical pickup in demand later this year and in reaction to the weakened U.S. dollar.

Also, China has increased its purchases for domestic wire and brass mills. Mohr adds that global supply-demand conditions for copper were in balance during the first half of 1992.

Zinc prices have held steady during the summer. “Prices have been underpinned by a substantial long options position by major producers on the London Metal Exchange,” Mohr writes. “Concern over potential supply disruptions due to labor contract negotiations at Canadian refineries in September- October has also been a factor.”

Increased demand during the first half of the year for galvanized steel (steel coated in zinc) in the U.S. for motor vehicle manufacture has been partly offset by softening demand in Japan and Western Europe, Mohr says.

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