Comments on: Chinese Surge in Construction Explains Pickup in Base Metals Stocks http://www.dailyreckoning.com.au/chinese-surge-in-construction-explains-pickup-in-base-metals-stocks/2009/06/02/ An independent perspective on the Australian and global investment markets Sat, 21 Nov 2009 17:27:32 -0600 http://wordpress.org/?v=2.8 hourly 1 By: Ross http://www.dailyreckoning.com.au/chinese-surge-in-construction-explains-pickup-in-base-metals-stocks/2009/06/02/comment-page-1/#comment-82053 Ross Wed, 03 Jun 2009 02:19:52 +0000 http://www.dailyreckoning.com.au/?p=6164#comment-82053 I feel well short of a grasp the story when it comes to forecasting Chinese resource consumption. I remember Gotliebson signing on with those forecasting exponential increases in iron & copper based on projections for new electricity generating capacity but they were looking backwards and forgot that the substantial part of the grid infrastructure was built in earlier periods to accomodate exponential growth. We know the Chinese were stockpiling and that the rise in the Baltic began before the Chinese stimulus but I haven't ever seen any decent stockpile reports and I am sure the Chinese are in no hurry to see one put together. We know that using USD reserves to buy resources equity and physical inventory and shortening the maturity on UST's is part of Chinese defences. We know how big the 3 gorges project was and how much new stimulus would be required just to replace it. But we also know that they have mobilised construction like Dan says and rebuilding after the earthquake is a social stability issue. I went into Mt Gibson on the plunge and am now in the black but I am still cautious on resources and especially so on the pricey BHP's etc. I feel well short of a grasp the story when it comes to forecasting Chinese resource consumption. I remember Gotliebson signing on with those forecasting exponential increases in iron & copper based on projections for new electricity generating capacity but they were looking backwards and forgot that the substantial part of the grid infrastructure was built in earlier periods to accomodate exponential growth. We know the Chinese were stockpiling and that the rise in the Baltic began before the Chinese stimulus but I haven't ever seen any decent stockpile reports and I am sure the Chinese are in no hurry to see one put together. We know that using USD reserves to buy resources equity and physical inventory and shortening the maturity on UST's is part of Chinese defences. We know how big the 3 gorges project was and how much new stimulus would be required just to replace it. But we also know that they have mobilised construction like Dan says and rebuilding after the earthquake is a social stability issue. I went into Mt Gibson on the plunge and am now in the black but I am still cautious on resources and especially so on the pricey BHP's etc.

]]> By: Ben Gee http://www.dailyreckoning.com.au/chinese-surge-in-construction-explains-pickup-in-base-metals-stocks/2009/06/02/comment-page-1/#comment-81891 Ben Gee Tue, 02 Jun 2009 15:27:39 +0000 http://www.dailyreckoning.com.au/?p=6164#comment-81891 Australia is in the best position to cash in on the crises. However, Australia must be realistic. High commodity prices will not be sustainable in the long run. The 2008 melt down was cause partly by high resourse prices. Good business must be on going and good relationship with customers are good for business. A very sucessful and wise uncle gave me the following advice: If you go into business to make money, the chances are you will go broke, no one want to give you his money. If you go into business to provide quality products at reasonable prices, customers will keep coming back. And if you do not work hard to keep customers happy, you have to work much much harder to find new customers. Australia is in the best position to cash in on the crises. However, Australia must be realistic. High commodity prices will not be sustainable in the long run. The 2008 melt down was cause partly by high resourse prices. Good business must be on going and good relationship with customers are good for business. A very sucessful and wise uncle gave me the following advice: If you go into business to make money, the chances are you will go broke, no one want to give you his money. If you go into business to provide quality products at reasonable prices, customers will keep coming back. And if you do not work hard to keep customers happy, you have to work much much harder to find new customers.

]]> By: Greg Atkinson http://www.dailyreckoning.com.au/chinese-surge-in-construction-explains-pickup-in-base-metals-stocks/2009/06/02/comment-page-1/#comment-81737 Greg Atkinson Tue, 02 Jun 2009 04:31:01 +0000 http://www.dailyreckoning.com.au/?p=6164#comment-81737 Yes sometimes things are exactly what they seem. There is no conspiracy, the Chinese are simply building a lot of stuff as they said they were going to do last year. I also do not see why anyone should be surprised that the Chinese are trying to pay less for commodities...it is called price negotiation, happens all over the world every day between buyers and sellers. It is also time for "payback" after BHP, RIO etc. hit them with over the top prices (and shipping charges) during the boom. You know sometimes a cigar is just a cigar :) Yes sometimes things are exactly what they seem. There is no conspiracy, the Chinese are simply building a lot of stuff as they said they were going to do last year. I also do not see why anyone should be surprised that the Chinese are trying to pay less for commodities...it is called price negotiation, happens all over the world every day between buyers and sellers. It is also time for "payback" after BHP, RIO etc. hit them with over the top prices (and shipping charges) during the boom.

You know sometimes a cigar is just a cigar :)

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