big day, page-12

RC

Those supply figures are likely to understate the real situation by many multiples. There are heaps of unexplored areas, and better exploration techniques now to find minerals and oil. Perhaps easily accessed light sweet oil is the only exception.

Substitution and technological change also have a major impact on demand that can not be predicted.

Garnout has been putting a positive spin about China for at least 30 years. Its his life's work. I would never trust that guy. Its in the interest of China to ramp up multiple sources of supply so as to reduce price. Japan did this very successfully for decades. If we were getting the long term contract prices (adjusted for inflation) for commodities such as iron ore when we first started exporting to them the prices would probably be higher.

At any point in time over-supply will lead to dramatic price falls which can last for extended periods because supply is inelastic in the short to medium term. In fact when the price falls supply may increase even more in the short term as mining companies ramp up production (if they can) to compensate for the falling price.

The jury is out on the likely direction of the price of Ni over the next year.

I am only invested in oil and mining and exploration companies (including BHP) so I do have an interest in such information.

Good luck, and be wary of resource spruikers.

Loki