COMMODITY PRICES, ESPECIALLY FOR GOLD, IRON ORE, STEEL AND CRUDE OIL ARE LIKELY TO STAY HIGH FOR THE SECOND HALF OF THE YEAR AS THE GLOBAL ECONOMIC OUTLOOK IMPROVES, SAYS GAVIN WENDT OF MINELIFE.
SHOWS: SYDNEY, AUSTRALIA (AUGUST 27, 2013) (REUTERS - ACCESS ALL)
GAVIN WENDT, FOUNDING DIRECTOR & SENIOR RESOURCE ANALYST, MINELIFE
1. REPORTER OFF CAMERA SAYING:
"Base metal prices have seen a strong run up in the current month. Do you see it as bargain buying as the sector was oversold? Or do you see an actual demand growth story building up?"
2. GAVIN WENDT SAYING:
"Well I believe it's a combination of both. Certainly as far as China is concerned, China is the biggest consumer of commodities in the world. And particularly in the base metal space, they are price movers as a result of their buying potentials. So traditionally they are very good at buying when prices are low. And equally pulling back from the market when prices are high. So you know, the Chinese are very much aware of their status as a price movers. And as a result, we've seen prices rebounding over recent weeks as a result of greater Chinese buying. There's also been the issue of I guess improved economic outlook around the world. We've seen better numbers coming out of China. We've also seen better numbers coming out of Europe, particularly with respect to the German economy over recent weeks. So that is also having an impact on base metals - a key component of economic growth. And it seems as though the world is becoming a little bit more comfortable about the economic outlook."
3. REPORTER OFF CAMERA SAYING:
"Steel and iron ore prices also have seen a rebound from this year's low. Do you see a further run up for them?"
4. GAVIN WENDT SAYING:
"That's a really interesting one because there are a lot of pessimist out there in the market that were talking down the steel sector and the iron ore business - predicting low levels of steel production and falling steel prices. We can't look at one set of numbers and deduce the trend. But certainly what it does reinforce is that China's economic growth is still very stable. The steel industry is a major component of their economy.
