In recent months, the prices of basic metals have weakened because the world economy has shown signs of slowing down. Demand in Europe, especially the United States, has fallen from previous levels. Changes in spot premiums have been triggered at different stages since the beginning of the year: LME spot prices The official pricing since May 18? A poor performance of aluminum. From what we can draw from these comparisons, aluminum retraced a lot during this period, followed by lead, followed by copper and zinc, and nickel. Outstanding Metals. In this report we provide some reasons why Al's performance is so bad. In Tuesday's report we mentioned that there has been a large number of long positions in the aluminum market, and that some new empty parts have been established. In early 2005, open interest fell by 19% in aluminum futures contracts to approximately 2.3 million tons, from 11.9 million tons to 9.6 million tons (LME 25 tons per hand): LME aluminum futures positions have declined since 2005, long Withdrawal from the market! Some situations in the aluminum market have deviated from the original bullish assessment of supply and demand fundamentals for 2005 and 2006 (including ourselves!). From a pure supply and demand basis, the market seems to be tight. Zhang’s, it is expected that there will be a supply gap in 2005 and 2006. Indeed, this year we believe that we estimate that all reporting stocks (LME, Comex. AIA, Japan's port stocks) will have a decline of more than 140,000 tons? An indicator of the outbound metal still exceeds 60,000 tons. The chart below also shows the status of the monthly stock consumption week. These figures are lower since the records in 1973. The reported aluminum stocks are still declining. The number of demand weeks is lower! Other factors that look at the economy are the Chinese government is trying to curb the export of aluminum, and it is possible to further increase the export tax, which will make many aluminum production capacity without the existence of economic value (cancellation VAT refunds and increases in export taxes, processing in three small quantities, etc.) At the same time, the high electricity cost production capacity in the United States and Europe also threatened to further close. We did not get the answer why this happens particularly in the aluminum market, but it means Here are some possibilities: “The recessive stocks†are still in large quantities, which put pressure on the market. Traders have released these stocks? It is our belief that such price behavior has occurred in recent years (because of lack of funds to carry out inventory financing). If this is the reason in any case, why is the reported inventory still declining? Demand has deteriorated faster than expected? Yes, but other markets should also be the case, why did it happen in the aluminum market? Also reported that stocks are still declining ... "funds" (hedge funds and certain traders) are particularly bullish on aluminum, and with excellent fundamentals The foundation, with the lack of confidence in economic approvals and demand, has lost confidence in holding out the longs held; while other funds and traders have decided to take the bullish positions out of the market and adopt a drastic short-selling scheme. This feeling may be a better explanation and may well provide an opportunity for a more fundamentally-based speculator to buy. If this is the case, short selling may be excessive and still relatively good fundamentals. .