Commodity analysts worldwide are expressing considerable concern about near-term pricing for key nonferrous metals. A key issue is that the already weak U.S. recovery may become stagnant in coming months further depressing demand for such base metals as aluminum, which is used in everything from beverage cans to airplane parts. Aluminum has been under pressure for the past two years due to the global economic slowdown and excess inventory. However, earlier in the year, producers boosted production to replenish depleted inventories. Now, with the outlook for demand again in doubt, these same aluminum mill product factories are scaling back output. Major gains in prices in the summer were unlikely, according to analysts who prepare Bank of Montreal's Commodity Price Index, "given uncertainty about the strength of the U.S. economic recovery and the customary slowdown in demand during the summer months." However, with the London Metal Exchange (LME) price running at 59¢/lb , the more than 70 aluminum smelting plants around the world can't sell their product at a profit, according to metals analyst Daniel Roling at Merrill Lynch in New York. Reason: Purchasing's pickup has been lethargic—even at depressed prices. In the first six months of the year, Roling says that consumption of the light metal grew just 3%.

stundza@reedbusiness.com