The metal and mineral sub-index of the Bank of Nova Scotia’s commodity price index appears to be on a downward trend despite the recent surge in gold.
The sub-index fell to a cyclical low in March and is expected to have dropped further in April, reports Economist Patricia Mohr.
Options-related selling by the Chinese on the London Metal Exchange triggered a decline in copper prices to US85 cents per lb. in March from $1 in February. At this low level, many Canadian operations are no longer profitable, Mohr says.
The Chinese are expected to consume more copper this year. However, imports of refined metal from the West may decline as China imports more copper from the Commonwealth of Independent States.
The recent startup of 20 small refineries in China may lead to a switch to concentrate from metal imports in 1993-94, Mohr adds.
The sub-index was down 1.8% in March from February and off by 9.1% from a year ago. The all-items index advanced 3.3% in March to a level 14.4% higher than a year ago. The advance was due to gains in the indexes for forest products and oil and gas.
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.
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