Table of Contents
4 Top Equity Ideas Summary
8 Economic Outlook: First Signs of Cyclical Recovery from a
Very Low Base
9 Commodities Outlook: A Recovery from the Worst
Downturn in 40 Years
Base Metals
18 Aluminum: Market Is Stabilizing, but Still Well Supplied
21 Alumina: Production Outages Providing Support, but
Capacity Slack Remains an Overhang
24 Copper: Copper Is Our Favoured Base Metal Exposure
28 Nickel: Positive Macro Trends and Investment Cuts
Likely to Support Higher Nickel Prices
31 Zinc: China Likely to Become a Net Exporter in 2H09
Steel and Raw Materials
34 Steel: Prices Bouncing as News Flow Gets Less Bad;
Chinese Demand Surprises Positively – RoW to Follow?
38 Metallurgical Coal: China to the Rescue, Forecast to
Remain Significant Net Importer
41 Thermal Coal: Forecasting Four-Year Cycle of Price
Increases
44 Iron Ore: Raising Iron Ore Price Estimates on Continued
Strong Chinese Demand and Declining Production in China
47 Ferrochrome: Ferrochrome Spot Prices Going Up with
Rising Stainless Materials Complex
50 Molybdenum: Prices Set to Bottom in 2009
Precious Metals
53 Gold: Rising Nominal Risks; Gold’s Real Value
56 Platinum: At These Low Prices, Has Platinum Become Precious Again?
59 Silver: Bullish Near Term (on Rising Base Metal Demand), Bearish Long
Term (on Rising Base Metal Supply)
Highest-Conviction Overweight Equities
62 Xstrata: Bottom-up Cost Restructuring Meets Top-down Commodity
Strength Ephrem Ravi
63 JFE Holdings: Cost Edge During Tough Economic Times
Harunobu Goroh
64 NLMK: Lowest Cash Costs in the World, Rising Export Demand, and
Cheap Valuation Dmitriy Kolomytsyn
65 Lihir Gold: Bullish on Gold Price Cameron Judd
66 US Steel: Most Upside to Mid-Cycle Valuation Mark Liinamaa
67 China Shenhua Energy: Best in Class Wee-kiat Tan
Highest-Conviction Underweight Equities
68 Fortescue Metals: Ability to Clear Volumes into the Market Weighs on
Valuation Craig Campbell
69 Alumina Limited: Leverage to Our Least Preferred Metal in Aluminum
Craig Campbell
70 Chalco: Aluminum Price Weakness to Affect Shares Barry He
71 Lonmin: Pricing In a Turnaround Already Where the Case Remains to
Be Proven Ephrem Ravi