Citigroup Metals Plays

Description:

Metals are striving for support after strong gains. Realistically the powerful and restocking-driven demand pulse seen in 1Q must flatten out. We see this as necessary and healthy.We do not believe that metals are artificially inflated,supply-threatened, or cyclically 'cooked'.We see the recent wave of M&A activity to continue as the valuation wedge increases between bullish commodity futures and dour sell-side consensus.We expect M&A to spill over to coal,which is fragmented and financially stressed compared to Non-ferrous and Steel.We are focused on companies where we see major multi-decade in-ground resource value.

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