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Non-Ferrous Metals: Key drivers in 2011
�� Credit tightening by China and a slower recovery in developed economies would mean global base metals demand
to grow at a slower pace of ~7% in CY11 against ~13% in CY10. However, liquidity and emergence of commodity
ETFs would mean higher metal prices in 2011, though pace of increase will be slower vs 2010
�� We have upgraded FY12 forecasts for Aluminium at USD 2,600/t (USD 2,500 earlier) and Zinc at USD 2,300/t (USD
2,200 earlier). Our FY13 forecasts for Aluminum and Zinc are USD 2,700 and USD 2,400, respectively
�� Underweight Metals: Incase of non-ferrous metals, though we believe that QE driven liquidity implies higher prices,
we believe that current valuations already discount the same (except Hindustan Zinc, which has upside due to
silver).
�� Risks: Sharp appreciation in USD on the back of lower-than-expected QE
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