Commerzbank: Base Metals Bounce; Some Aluminum Shutdowns Occurring

Signs of recovery are occurring in base metals as some market participants view the recent price slump as exaggerated and are snatching bargains, says Commerzbank. All of the base metals are higher so far Tuesday. Further, the bank says that aluminum smelters are becoming increasingly unprofitable and some are temporarily shutting down. This is especially the case in China, as data from the International Aluminum Institute show that production in October declined by 5.7% month-on-month. Aluminum hit a 15-month low of just over $2,050 a metric ton. “If prices remain low, further production shutdowns are likely,” Commerzbank says. “It is estimated that the marginal costs of production in China are $2,300 per ton.” The bank notes that Chinese customs data shows that the country was a net importer of primary aluminum in October for the third straight month, even though both import and export volumes were still down overall.