ScotiaBank metal sub-index falls in September

In September, the metal and mineral sub-index of The Bank of Nova Scotia’s commodity price index dropped to its lowest level since December, 1985.

While copper prices dropped further in October, nickel prices bounced back to US$2.04 per lb. from a low of US$1.82.

Economist Patricia Mohr says the market has responded favorably to news that Canadian producer Inco (TSE) will reduce nickel output by 60 million lb. in 1993-94, roughly 5% of 1992 Western World supplies. This cut is about one-third the amount required to bring global output back in line with demand. Even with output slashed, however, nickel prices remain well below average Western World cash costs, Mohr reports.

Zinc prices steadied at US42 cents per lb. in late October. Strong U.S. demand for galvanized steel in the auto industry and construction industries has almost offset weak consumption in Europe and Japan this year. U.S. motor vehicle production in the fourth quarter is expected to climb 13% above the previous year, to 11.7 million units — the highest level since early 1989. Canadian motor vehicle production in the third quarter was also at a record high.

The metal and mineral sub-index was down 3.9% in September from August, and off by 18.1% from one year ago. The all-items index rose by 1.2% in September to a level 3% below a year ago.

The all-commodity index tracks export prices of various Canadian commodities. These are weighted according to their 1984 export values, except crude oil, for which the value of net exports is used.