COMMENTARYMorgan Stanley prefers mid-late cycle commodities and...

COMMENTARYMorgan Stanley prefers mid-late cycle commodities and notes support for South32, which is enjoying revenue exposure to aluminium, metallurgical coal and alumina.The issues centre on growth versus inflation and, over the short term, the broker considers growth will win, despite accelerating inflation, as central banks remain accommodative.Overweight rating retained. Industry view: In-Line. Target rises to $4.20 from $3.45.

Credit Suisse23/09/20211Outperform$3.8012.09%COMMENTARYAlcoa will recommence production at Alumar in Brazil, having completed a feasibility study. Credit Suisse suspects South32, which owns 40%, is yet to obtain the full details of the study and complete its work.The broker notes the Alumar smelter was at the top of the cost curve when it was idled in 2015 and likes the potential, given this is "green" aluminium.Outperform rating maintained. Target is $3.80.FORECAST

Macquarie22/09/20211Outperform$4.3026.84%COMMENTARYAlcoa will re-start its share of capacity at the Alumar aluminium smelter in Brazil by the end of 2022. South32 owns 40% of the project and Macquarie expects the company to formally commit to the re-start over the next few months.The broker incorporates the re-start in forecasts, which increases prospective aluminium production for South32 by around 20%. Outperform retained. Target is raised to $4.30 from $4.10.