who posted 40 cents, page-29

Hi Vayama

Cash reserves and cash burn.

But, on the positive side, UMC had about $16M at last count or something in that vicinity. Others will correct me if this not accurate.

Will need to manage very carefully going forward until clarity emerges as to the length of this thing.

Some further thoughts re the time lag on how long it may take for the Chinese stimulus package to start kicking in.

Currently, as people know, around seventy to eighty million tonnes of ore stockpiles sitting in Chinese ports.

Then, on top of that there are the steel stockpiles that will need to be cleared.

So, it could be another six months before we start to see a pick-up in ore demand.

Does that imply a continual fall in IO demand until then, and continual production cutbacks from the majors until then? Not sure.

ATM, my feel is that we could see significantly increased production cutbacks from the majors for CY 2009 over and above what they have already announced.

A further aspect to consider re the Chinese stimulus package. The multiplier effect. Here in Australia, it's generally considered to sit at around 3.5 to 4.0.

Different story in China because of the higher propensity to save.

Given, the tightening situation in China, it's possible that the Chinese might even decide to hoard greater proportion of cash and so the multiplier might be even lower, thereby reducing the multiplier number out of the stimulus package from what it has been these last few growth years.

This is all important to how IO and commodity demand will play out going forward these next few years.

BUSH