Tuesday, 06 Sep 2011
Goldman Sachs has lifted its price forecasts for iron ore and coking coal, Australia's two biggest exports, despite growing concern about the health of the global economy.
Goldman said that demand from China and other emerging markets was "holding up well", pointing to a bright outlook for the bulk commodities.
Analyst Mr Malcolm Southwood said that "This is important because, even with raw materials consumption in developed economies still below pre GFC levels, the growth in consumption in emerging markets means that for most major commodities new global records of offtake will be set this year.”
He added that "Commodities that are supply constrained should remain attractively priced and for some of them, further upside looks likely."
Rio Tinto this week predicted iron ore demand would outstrip the existing production of Australia and Brazil within eight years.
This, and expectations of continued high prices, has sparked a multi billion dollar ramp up of operations in Western Australia's Pilbara region by BHP Billiton, Rio and Fortescue Metals Group, driving up wages and other costs.
Miners last month noted cost inflation, but Mr Southwood said this raised the support levels for commodity prices.
Growing fears about Europe's debt crisis and the US economy, which shook stockmarkets last month, had prompted the US Federal Reserve to pledge to hold interest rates near zero and hint at more stimulus, he said.
(sourced from TheAustralian)
Goldman Sachs has lifted its price forecasts for iron ore and coking coal, Australia's two biggest exports, despite growing concern about the health of the global economy.
Goldman said that demand from China and other emerging markets was "holding up well", pointing to a bright outlook for the bulk commodities.
Analyst Mr Malcolm Southwood said that "This is important because, even with raw materials consumption in developed economies still below pre GFC levels, the growth in consumption in emerging markets means that for most major commodities new global records of offtake will be set this year.”
He added that "Commodities that are supply constrained should remain attractively priced and for some of them, further upside looks likely."
Rio Tinto this week predicted iron ore demand would outstrip the existing production of Australia and Brazil within eight years.
This, and expectations of continued high prices, has sparked a multi billion dollar ramp up of operations in Western Australia's Pilbara region by BHP Billiton, Rio and Fortescue Metals Group, driving up wages and other costs.
Miners last month noted cost inflation, but Mr Southwood said this raised the support levels for commodity prices.
Growing fears about Europe's debt crisis and the US economy, which shook stockmarkets last month, had prompted the US Federal Reserve to pledge to hold interest rates near zero and hint at more stimulus, he said.
(sourced from TheAustralian)
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