price esimate, page-8

Get em while they're cheap!!



IN just the next 10 years China will consume about as much steel as the US did in the entire 20th century, when it was the world's industrial powerhouse.

This projection is drawn from a graph in BHP Billiton's presentation on its - there really is no other word - stunning $2 million an hour 2007-08 profit.

The point of the graph, from BHP's perspective, was of course to emphasise, as the presentation put it, "a huge call on steelmaking raw materials".

The two main ones being of course iron ore and metallurgical (formerly known as coking) coal - both of which BHP happens to have quite a lot of. Or to be more exact, Western Australia and Queensland, respectively, have a lot of.

BHP sought to make two points: that it is going to sell a lot more iron ore and m-coal to China. And implicitly at higher prices.

We certainly know that's the case in the coming year, when contract iron ore prices will rise by nearly 100 per cent, and m-coal by more than 200 per cent.

The important point I'm adding is that Australia is also going to sell a lot more, more expensively, of not just these two materials. It will sell the full range of commodities in demand in an industrialising, urbanising, increasingly prosperous China. Minerals, energy and people energy - otherwise known as food.

http://www.theaustralian.news.com.au/story/0,25197,24226011-30538,00.html