èCurrent iron ore and coking coal price levelspoint to markets that are in deficit, and running at near full capacity on thesupply side, setting these markets up for a strong 2011.

èSlowdown in global demand growth is expectedas in short term, but not a fall in the level of demand, which means thesemarkets should stay in deficit and prices rise over the next 6-12 months.

èVery little slowdown in Chinese constructionactivity has been witnessed as government is trying to stimulate housing supplyto increase affordability. The 12th 5 year plan should befairly benign; however, spending by the national grid is expected to risesharply, which is bullish for copper.

èDeveloped world demand has rebounded stronglyin 2010 due to restocking, with growth through 1H10 largely ex-construction. Apick up in construction activity ex-China represents a key upside risk tocommodity prices.

èSupply dynamics of individual commodities isbecoming increasingly important

èChina, the flexible friend, leads the supplyresponse in down and upside – RMB appreciation raises marginal costs.
Stocking/de-stocking on price.