Commodity index tracks decline in metal prices

The commodity price index of Scotiabank edged down by 0.4% in August, the third drop in as many months. Declines in metal and mineral, agricultural, and oil and gas prices more than offset stronger forest product prices.

The metals and minerals sub-index slipped slightly alongside lower nickel, aluminum, gold and silver prices. In September, copper and zinc prices came under pressure. The market, economist Patricia Mohr points out, appears to be reflecting concern about economic conditions in the U.S., Germany and Japan. Nickel prices slipped to US$3.03 per lb. in late September from $3.40 in July; Mohr says Western World breakeven costs currently average $3.37 (including depreciation and interest expenses).

Nickel stocks at the London Metal Exchange (LME) have risen, partly because of increases in shipments of Commonwealth of Independent States (CIS) nickel to Western Europe. Mohr says CIS nickel is being sold at large discounts to LME prices.