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Commodity Outlook

- Long-Term Prices Revised, Mostly Up "In some commodities the increases are dramatic. This is a major body of work and the most important section of this report."
- "The Main Drivers are operating cost inflation, and capital costs in commodities where ongoing capacity investment is required."
- "Margins are stable in the long term, although highly cyclical. They vary widely between commodities, reflecting structural differences."
- "Structural Change will be particularly important in some commodities. It takes various forms such as technology (nickel) and competitive landscape (coal)."
- Short- and Medium-Term Prices Revised Down a Bit "Demand indicators are still positive although slowing."
- Fund Flows – Risk Off "Speculative profit taking has been an important source of price weakness."
- Commodity League Table "Our preference for bulks over base metals is increased. We favour the coals, increasingly thermal coal. Copper remains our most favoured base metal. There is little downside risk for aluminium."
Citigroup Commodity Outlook July2010

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