· In these forecasts we express our bullishness on copper and iron ore in particular (relative to consensus), and turn bullish on zinc. We expect sentiment in the very short term (the coming month) will remain weak, and our recommendation is for investors with 3-12 month time horizons to buy iron ore and copper, as well as zinc, platinum and molybdenum over the coming 1-2 months.

· We are very bullish on the outlook for further commodity-intensive Chinese growth, expect rising costs will steepen most commodity cost curves supporting strong pricing over the medium term, and believe that any slowdown in growth in 2Q11 and 3Q11 will be temporary and short-lived.

· The prolonged need for Chinese domestic supply and strong levels of industry cost inflation have led us to make significant upgrades to our iron ore price profile across the short, medium and long term. We now expect the iron ore price will trade between $150/t and $190/t over the next three years (down slightly in near term and rebound through 3Q) and believe rising capital intensity for new projects has necessitated a rise in the long-term price to $80/t CFR China (real basis).

· We expect that copper will rise strongly through 2H11 and 1H12 and average $5/lb in 2H11 and $5.50/lb in 1H12, from current spot prices of ~$4/lb. In particular, we have pushed out our peak copper price from 2H11 to 1H12, owing to higher-than-expected scrap availability over the past six months.

· We have become bullish on zinc post sell-off (previous view bearish)as the price is restricting Chinese supply growth at these levels, and physical premiums show the market is tightening up.

· Taking a 6-12 month view we are particularly bearish on nickel (strong supply growth prospects) and aluminium (expect relative underperformance, as eventually LIBOR rates will rise and off-LME stocks will become available, and LME warehouse withdrawal limits could also change on May 27th).

· Our concern in the very short term (the next month) is that sentiment toward commodities could be negatively impacted by a) the release of slowing Chinese growth in industrial output and end-use consumption – it is important to note this data is lagging as the slowdown has already happened on the ground (credit availability has been tightened since the beginning of the year), b) a potentially weak June 1 China PMI data point – our China economist expects the Chinese PMI could read sub 50, c) fears about the impact of the end to QE2 on the US dollar. Part or all of these macroeconomic concerns may already be factored following the recent metals sell-off.