The worst of the cycle could be over

In my view, we're currently bouncing along the bottom of the mining cycle with good scope for upside over the medium term as a range of commodities are currently priced well into their respective cost curves, which is unsustainable. The recent pullback in the USD coupled with significantly improving Chinese data has driven a number of commodities higher through Q1 and into Q2. We don’t anticipate smooth sailing but take the view that the worst of this cycle is probably over. The shorts are getting lighter and the sector is under-owned by the generalist funds.