Moderately lower base metals, molybdenum, uranium and silver prices more than offset stronger gold, potash and cobalt prices in May, lowering the Scotiabank Commodity Price Index by 2.3% last month. LME copper prices eased from US$4.30 per pound in April to $4.05 per pound in May "and are still exceptionally lucrative at US$4.08 in late June," noted Scotiabank economist Patricia Mohr. "Traders have been reluctant to bid prices below US$4, with Chinese buying expected to rebound in the second half of 2011 and world supply/demand conditions returning to ‘deficit;," she said. Nevertheless, Mohr anticipates U.S. copper demand will be boosted in the third quarter by "resumed Japanese auto assemblies in the United States, as the parts shortage subsides-also lifting U.S industrial activity." In her analysis, Mohr noted spot potash prices (FOB Vancouver) are up US$102 per tonne since December 2010, averaging $445 tonne in May to $481 per tonne in June. "Canpotex has sold considerable volumes to Brazil and Southeast Asia recently at higher prices; another increase is being considered for late summer," she said. "As yet, there is no news on second-half potash contracts with India, which objects to rising prices from Canpotex and BPC [Belarusian Potash Company]." "World potash deliveries should total around 58-59 mt in 2011, on a par with the previous peak in 2007," Mohr predicted. Meanwhile, spot uranium prices edged down from an average of US$57.56 per pound in April to $56.90 in May and are now $54.25, said Mohr. Long term base contract prices fell $2 to $68 per pound in late May. Mohr forecast that contract pricing for premium-graded coking coal from Western Canada to Asian markets "should hold up near the current record high of US$330 per tonne in 2011:Q3 (July to September)." She observed that Queensland mines have not yet fully recovered from flooding earlier this year and "supplies of higher-quality coal remain tight."

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