Wednesday, 07 Sep 2011
Mr Bill Evans China chief economist of Westpac said that iron ore prices are set to dip next year after unprecedented stockpiling of the steel making commodity. He also said the oil price could fall because of weaker global growth.
Mr Evans said the iron ore price was higher than he would have expected, given that the brakes were being put on China's investment property boom after a dangerous surge in residential construction to levels almost double that of underlying demand.
Mr Evans told the RIU Good Oil conference in Fremantle, Western Australia said that "The area where you would have expected to see the greatest slow down would be in the iron ore price and that's as strong as ten men ... but I'm saying I would expect prices to start to turn down. I suspect there's a degree of stockpiling at the moment. Inventories are very high, the highest they've ever been. That can easily turn."
Mr Evans said that China would take a breather with iron ore purchases in the next 12 months but that its appetite would return as the Asian superpower continued its unprecedented industrialization, provided authorities staved off a return to high inflation.
He said that "They've been unsuccessful so far in containing inflation pressures, so there's this balancing act about wanting to increase housing affordability. So (the government is also) discouraging the investment bubble in housing as well as wanting to contain inflation pressures, and balance that off against maintaining decent growth momentum.”
Mr Evans said the long term oil price would likely rise to USD 100 a barrel from about USD 83 a barrel currently as industrial production in OECD countries fell.
He was more skeptical about the short term outlook for oil saying global growth the critical factor driving the oil price would fall below trend next year at 3.5%.
(Sourced from AAP)
Mr Bill Evans China chief economist of Westpac said that iron ore prices are set to dip next year after unprecedented stockpiling of the steel making commodity. He also said the oil price could fall because of weaker global growth.
Mr Evans said the iron ore price was higher than he would have expected, given that the brakes were being put on China's investment property boom after a dangerous surge in residential construction to levels almost double that of underlying demand.
Mr Evans told the RIU Good Oil conference in Fremantle, Western Australia said that "The area where you would have expected to see the greatest slow down would be in the iron ore price and that's as strong as ten men ... but I'm saying I would expect prices to start to turn down. I suspect there's a degree of stockpiling at the moment. Inventories are very high, the highest they've ever been. That can easily turn."
Mr Evans said that China would take a breather with iron ore purchases in the next 12 months but that its appetite would return as the Asian superpower continued its unprecedented industrialization, provided authorities staved off a return to high inflation.
He said that "They've been unsuccessful so far in containing inflation pressures, so there's this balancing act about wanting to increase housing affordability. So (the government is also) discouraging the investment bubble in housing as well as wanting to contain inflation pressures, and balance that off against maintaining decent growth momentum.”
Mr Evans said the long term oil price would likely rise to USD 100 a barrel from about USD 83 a barrel currently as industrial production in OECD countries fell.
He was more skeptical about the short term outlook for oil saying global growth the critical factor driving the oil price would fall below trend next year at 3.5%.
(Sourced from AAP)
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