Don't blame Bush on Oil Prices, Blame China

[VeriSexy]

JOHN HEINZL
From Saturday's Globe and Mail



When Inco Ltd. opened a sales office in Shanghai a decade ago, the nickel giant's timing couldn't have been more fortuitous.

Back then, China's nickel consumption was still only one-quarter of Japan's. But this year, the emerging economic superpower of 1.3 billion people is poised to overtake the world's second-largest economy, Japan, as the biggest consumer of the metal.

That's significant, because surging demand for nickel ? a key ingredient in stainless steel for automobiles, kitchen appliances, electronics and other goods rolling off China's production lines ? is a telltale sign of a fast-growing middle class of acquisitive consumers.

China is booming, and nobody knows that better than Canadian resource producers such as Inco. Already the world's sixth-biggest economy, China's share of global output is expected to double by 2020. Its voracious appetite for raw materials such as nickel, copper, zinc, aluminum and coal has pushed commodities prices through the roof and is reawakening Canada's long-sleepy resource sector.

Consider this the next time you fill up: One reason oil has soared to about $40 (U.S.) a barrel is that China is guzzling so much of it.

China's emergence on the world stage is a seismic development, not just for Canada, but for the entire global economy. And it's no passing fad. "This is the biggest event since the United States became an economic power in the post-Civil War period," said Stephen Poloz, senior vice-president and chief economist at Export Development Canada.

But as Chinese-made DVD players and bicycles flood into markets around the world, fears are emerging that its economy, which expanded at a sizzling 9.7-per-cent annualized clip in the first quarter, may be growing too fast. With the Chinese government struggling to find the right mix of measures to prevent the economy from overheating, resource prices have slipped from their peaks and shares of Inco and others have dropped.

So the party's ending, right? Not even close, said Inco chairman and chief executive officer Scott Hand. "In our view, the good times for nickel are far from over," he told the Merrill Lynch Global Metals, Mining and Steel Conference in Boston this month.

Sure, China will hit potholes on the road to prosperity, and those bumps will be felt halfway around the world by Canadian companies and investors. India was a stark reminder of the risks inherent in emerging economies when its stock market plunged about 16 per cent in the two days following this month's election.

But China's evolution into an economic power, and the bull market in commodities it has created, has a long way to go, analysts say.

"As long as one is willing to accept perhaps some additional disappointment in the short run ..... we think commodity prices will rebound as China fears are put into better perspective," said George Vasic, chief economist and strategist at UBS Securities Canada Inc.

In a report this month, titled "Metals: Time to Reload," Mr. Vasic and Jonathan Anderson, UBS's chief economist on China, offer four reasons that the commodities rally has plenty of steam left:

nThe betting is that China's economy can avoid a hard landing.

nIn previous commodities rallies ? such as those from 1979 to 1982, 1986 to 1988 and 1993 to 1995 ? resource stocks pulled back before resuming their upward march.

nResource stocks have fallen to levels that are now historically cheap relative to their underlying commodities.

nU.S. Treasury yields are rising, and they usually move in tandem with metals prices.

A sustained commodities rally rests on how successful authorities are in managing China's growth.

For the past quarter-century, China's economy has expanded at an average annual rate of nearly 9 per cent, transforming the country into a manufacturing powerhouse that is gobbling up raw materials like Mikey eats Life cereal.

With its vast, low-wage work force, China is now responsible for 30 per cent of global manufacturing output. Last year, it accounted for half of global consumption of cement, 36 per cent of steel and 30 per cent of coal, according to a report from Toronto-Dominion Bank titled Profiting From China's Economic Boom.

"To the extent that Chinese demand continues to push commodity prices higher, China's economic performance will boost earnings of commodity-related companies," said the report by TD economists Craig Alexander and Parhat Zunun.

In Canada, it's hard to find an economic sector that isn't touched by China's dazzling growth. According to Industry Canada, exports to China have soared 75 per cent in the past five years, reaching $4.7-billion (Canadian) in 2003. While that was a small fraction of Canada's total exports of more than $380-billion, the incremental demand from China is having a big impact on a wide swath of resource-based industries.

Take recycled paper. In the past year or so, Chinese buyers have suddenly begun snapping up massive quantities of old newspapers, magazines and corrugated cardboard, which they ship back home and recycle at Chinese paper mills.

"They'll just take everything. They have people on ships who sort it as it is being transported on the boat," said Andrew Casey, a Forest Products Association of Canada spokesman. "It creates a huge challenge for the industry here."

Because Chinese workers get paid a fraction of what Canadian paper sorters earn, Chinese buyers are able to outbid Canadian paper companies for recyclable product, he said. As a result, the price per tonne of recyclable paper soared to a peak of $128 in March from $90 a year ago, he said.

Steel prices are also up sharply because of Chinese demand, benefiting producers such as Dofasco Inc., Algoma Steel Inc. and Stelco Inc.

China has also developed an appetite for Canadian seafood. Frozen shrimps and prawns are one of Canada's fastest-growing exports to China, with shipments climbing eightfold in the past five years to $104-million in 2003.

"It's grown very dramatically. If you go back six or seven years, China did not import one single ounce of cold-water shrimp," said Randy Bishop, vice-president of international sales and marketing at St. John's-based FPI Ltd.., which also exports snow crab, sea scallops and other products to China.

Clearwater Fine Foods Inc. of Bedford, N.S., with 30 per cent of its sales going to Asia, is also heavily targeting the Chinese market.

Exports of auto parts, lumber and assorted chemicals have also risen sharply in recent years, Industry Canada says. Norske Skog Canada Ltd., for instance, said its pulp business during the first quarter was "brisk ..... stemming largely from solid demand from Chinese buyers and tighter supply."

And Tesma International Inc. plans to open a factory in China this year to supply the country's burgeoning auto industry. Tesma, which is controlled by Magna International Inc. of Aurora, Ont., will make engine belt tensioners for Volkswagen AG.

With Canada's economy forging closer ties to China, how events unfold over there will be critical for companies here. For Chinese authorities, the challenge is to tame the runaway growth without tipping the country into recession.

"It is like riding a bicycle ? the rider needs momentum to stay upright, but too much raises the risk of a crash," said Mr. Poloz of EDC.

China's central bank is concerned that white-hot growth will ignite inflation, which climbed to a seven-year high of 3.8 per cent in the year to April 30. The bank is also worried that the high volume of bad loans within the financial system, estimated to range from 20 per cent to as high as 40 per cent, will contribute to a boom-bust scenario.

In a bid to prevent the bubble from bursting, China's central bank has raised reserve requirements for banks and announced restrictions on investments in some of the fastest-growing sectors, such as real estate, auto production and steel. As well, it raised the discount rate it charges banks for loans. Complicating matters, however, the central bank pegs its currency, the yuan, to the U.S. dollar, which limits its domestic policy options.

"The Chinese central bank is trying to engineer a soft landing, and if it's successful this will just be a hiccup," said Eric Roseman, president of ENR Asset Management Inc. in Montreal, which manages money for clients outside Canada.

"If it's not successful and you go from boom to bust ..... it will be a disaster for the Chinese markets, it will be a disaster for Chinese real estate and it will be a disaster for global commodities."

That will slam Canadian corporate earnings, the Canadian dollar and the Toronto Stock Exchange, he said. But he considers the probability of a meltdown remote.

Yanick Desnoyers, senior economist at National Bank Financial, said the situation today is different from China's last bust in the early 1990s, when growth was 15 per cent, inflation 25 per cent and the country was running large current account deficits, in contrast to today's surplus.

"Inflation is not currently in runaway mode," he said. "We think the financial markets are spooking too soon."

Inco's Mr. Hand is also optimistic. He expects China to consume five million tonnes of stainless steel this year. That would still be just one-third of the average per capita consumption of Western countries ? leaving plenty of room for growth.

Nickel demand will get an added boost from the 2008 Summer Olympics in Beijing, he said. For Inco, there is little time to rest.

"We are producing every pound of profitable nickel that we can," he said.

http://sympatico.globeandmail.com/se...atico-business

[NickPapageorgio]

More propaganda from the white house. Good read though.

[Groove]

[slackologist]

Originally posted by VeriSexy


Consider this the next time you fill up: One reason oil has soared to about $40 (U.S.) a barrel is that China is guzzling so much of it.

Another reason to consider, the U.S is guzzling so much of it and has been for quite a while.

[genomega]

Originally posted by NickPapageorgio
More propaganda from the white house. Good read though.

Propaganda? Look it up for yourself (If you don't know how ask for help). China and India are sucking up all the resources they can get their hands on.

[slackologist]

But those companies like Halliburton, Brown & Root etc that buy crude oil when it's cheap, stockpile it and sell when it's double the price must be happy.

[slackologist]

Originally posted by genomega
China and India are sucking up all the resources they can get their hands on.

yes, this is what countries do.. look at U.S /U.K history it took a hell of a lot of oil and steel to get them where they are today.

[VeriSexy]

Originally posted by NickPapageorgio
More propaganda from the white house. Good read though.

Whitehouse owns "Globe and Mail"?

[directfiesta]

Originally posted by genomega
Propaganda? Look it up for yourself (If you don't know how ask for help). China and India are sucking up all the resources they can get their hands on.

what an idiot!

research the US consumption ratio...

If India and China would be the same ratio, yhere would be no oil left... and you could transform your gas guzzler SUV in museum.

[TechNtentions]

BUSH is still a fag - BUSH is still a fag - BUSH is still a fag - BUSH is still a fag - BUSH is still a fag BUSH is still a fag

[VeriSexy]

Originally posted by directfiesta
what an idiot!

research the US consumption ratio...

If India and China would be the same ratio, yhere would be no oil left... and you could transform your gas guzzler SUV in museum.

True but China is doubling every 10 years

http://www.geohive.com/charts/linkc....ons&xsl=en_res

Pretty strong effect on oil prices

[bizmak]

Don?t blame China, blame Bush. In our country (Macedonia, Europe) oil is more than 1$. How can you explain me that ?

[Webby]

The US consumes, or tries to consume, 20-25% of the world's resources - not just some oil. Yet is only contains 5% of the world's population. Duh?

Some need to get into the real world and do conservation before moaning about gas prices. Welcome to "the way it is" in the future!

China and India are developing countries - ie they actually produce something and are nowhere near the pro rata consumption levels of the US.

[rickholio]

Hey, Canada's more than happy to sell product to China. That's free enterprise, baby. Quit your bitching.

You wouldn't want to be labelled some sort of commie by suggesting barriers to free trade, now, would you?

Besides, by inflation-adjusted dollars, your gas prices are among the lowest they've ever been. Check the cost of gas by adjusted dollars, die-rect from the Dept. of Energy:



The haters have to quit whining and adjust to the new reality: There's other big countries sucking up resources as fast as you, now. Get used to less.

Edited PS: Anyone else get a chuckle from the irony that gas prices have started to go up since the bush regime? Only other times was during the great depression and the OPEC oil crisis.

[=^..^=]

US gov can try to justify it however they want -
oil prices are coz up Bush
end of story

[VeriSexy]

Originally posted by rickholio
Hey, Canada's more than happy to sell product to China. That's free enterprise, baby. Quit your bitching.

You wouldn't want to be labelled some sort of commie by suggesting barriers to free trade, now, would you?

Besides, by inflation-adjusted dollars, your gas prices are among the lowest they've ever been. Check the cost of gas by adjusted dollars, die-rect from the Dept. of Energy:



The haters have to quit whining and adjust to the new reality: There's other big countries sucking up resources as fast as you, now. Get used to less.

Edited PS: Anyone else get a chuckle from the irony that gas prices have started to go up since the bush regime? Only other times was during the great depression and the OPEC oil crisis.

Yeah, invading Iraq will have affect on oil prices. It's a member of Opec. Wonder which Opec country will get invaded next.

Algeria
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
the United Arab Emirates
Venezuela

http://www.opec.org/

[69pornlinks]

Originally posted by VeriSexy
Yeah, invading Iraq will have affect on oil prices. It's a member of Opec. Wonder which Opec country will get invaded next.

Algeria
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
the United Arab Emirates
Venezuela

http://www.opec.org/

once OPEC start trading oil in EURO's bye-bye to the dollar, you know iraq was going to start after getting their sanctions lifted, but lo and behold they got invade JUST IN TIME,

[VeriSexy]

Originally posted by 69pornlinks
once OPEC start trading oil in EURO's bye-bye to the dollar, you know iraq was going to start after getting their sanctions lifted, but lo and behold they got invade JUST IN TIME,

John Bolton, undersecretary of State for Arms Control, has included Libya, Syria and Cuba as countries that will pose the most significant threat to the U.S. after the "axis of evil? nations ? Iraq, Iran and North Korea -- as identified by President Bush.

I see a few members of OPEC



http://www.rmsg.us/Geopolitics/evil.htm

[EviLGuY]

Originally posted by VeriSexy
Yeah, invading Iraq will have affect on oil prices. It's a member of Opec. Wonder which Opec country will get invaded next.

Algeria
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
the United Arab Emirates
Venezuela

http://www.opec.org/

Invade em all.. they are all pretty weak militarily.

[VeriSexy]

Originally posted by EviLGuY
Invade em all.. they are all pretty weak militarily.

Venezuela or Iran



Invade us and it's no more oil, Chavez tells US

Venezuela's President, Hugo Chavez, has vowed to freeze oil exports to the US and wage a "100-year war" if Washington ever tried to invade his country.

The US has repeatedly denied ever trying to overthrow Mr Chavez, but the leftist leader has accused Washington of being behind a failed 2002 coup and of funding opposition groups now seeking a recall referendum on his presidency. US officials say Washington supports peaceful elections in Venezuela.

But Mr Chavez accused the US of ousting the former Haitian President, Jean-Bertrand Aristide, and warned it not to "even think about trying something similar in Venezuela".

Venezuela "has enough allies on this continent to start a 100-year war," Mr Chavez said during his weekly television and radio show on Sunday.

"US citizens could forget about ever getting Venezuelan oil" if the US ever tried to invade.

If people wanted a referendum against him, they should seek one peacefully, he said.

In the rambling five-hour broadcast that mixed threats with appeals, he also said he regretted the deaths of eight people in the recent street protests by opponents calling for him to submit to a recall vote.


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"So what is it this Government is trying to do? Destabilise its secure [oil] supplier?" Mr Chavez asked. He said the recent anti-Government protests were "made in the USA". Venezuelan oil exports were not affected by them.

Venezuela provides about 15 per cent of US oil imports but relations between the two countries are rocky over Mr Chavez's friendship with Cuba's President, Fidel Castro, his criticism of US-led negotiations for a free trade zone in the Americas, and his opposition to the Iraq war.

The US was slow to condemn the 2002 coup attempt, initially accusing Mr Chavez of provoking his own downfall.

Mr Chavez has increasingly railed against US meddling in Venezuelan affairs as his opponents step up protests to demand the recall vote. American officials have recently accused Mr Chavez of becoming increasingly autocratic.

On Saturday, at least 500,000 Venezuelans marched in Caracas to protest against a National Elections Council decision last week that an opposition petition for the recall vote did not have enough valid signatures. Opponents turned in more than 3 million signatures on December 19 but the council ruled only 1.8 million were valid. It ordered more than one million citizens to confirm they had signed, and rejected more than 140,000 signatures.

Rioting over the decision killed eight people and injured scores more. The violence subsided after the Organisation of American States and the US-based Carter Centre pledged to help give citizens a fair chance to prove they signed.

Venezuela is riven between those who fear Mr Chavez is trying to impose Cuba-style socialism and those who say he has given an unprecedented political voice to the impoverished majority.

Mr Chavez insists election officials have reason to believe the recall petition is fraud-ridden. He claims many signatures belong to dead people, minors and foreigners.

http://www.smh.com.au/articles/2004/...594299015.html

[directfiesta]

Originally posted by VeriSexy
Venezuela or Iran



Invade us and it's no more oil, Chavez tells US

[/B]

Venezuela first: the US has always had a " certain" success in central and south americas invasion or subversion ... ( no religion problem there! ...read: no muslims)

Not so good in Arabia....

[VeriSexy]

WMD in Iran

A classified report on Iran's nuclear program raises serious questions and concerns about Tehran's activities, casting doubt on the Islamic republic's explanation for how centrifuge parts became contaminated with highly enriched uranium.


http://edition.cnn.com/2004/WORLD/me...ran/index.html

Iran 'rushing to build nuke bomb'

http://edition.cnn.com/2004/WORLD/me...ear/index.html

Not good sinces Iran is labeled as part of "Axis of Evil"

[kenny]

This morning I could not find a lighter and had to light my cigarette off the toaster.

I cannot link it directly but I can`t help but figure Bush had something to do with the absence of my lighter.

I suspect it`s Bush's fault when I can't find my keys as well.

The rise of Hitler, AIDS and organized crime.. we might as well blame him for these as well

[directfiesta]

Originally posted by VeriSexy
WMD in Iran

A classified report on Iran's nuclear program raises serious questions and concerns about Tehran's activities, casting doubt on the Islamic republic's explanation for how centrifuge parts became contaminated with highly enriched uranium.


http://edition.cnn.com/2004/WORLD/me...ran/index.html

Iran 'rushing to build nuke bomb'

http://edition.cnn.com/2004/WORLD/me...ear/index.html

Not good sinces Iran is labeled as part of "Axis of Evil"

Source of the " intelligence" ????? Tennet ? Chalabi?

LOL

[VeriSexy]

Originally posted by directfiesta
Source of the " intelligence" ????? Tennet ? Chalabi?

LOL

Doesn't matter what you think, there will be another war when Bush get another 4 years

[OzMan]

Originally posted by 69pornlinks
once OPEC start trading oil in EURO's bye-bye to the dollar, you know iraq was going to start after getting their sanctions lifted, but lo and behold they got invade JUST IN TIME,

Exactamundo,

This was a warning to other countries not to even think about doing this. A temporary solution at best.

[angelsofporn]

if bush gets in again there will be a draft..so lots of you under 25 US webmasters will be going to do god's work...remember before you go, I'll buy your sites..

[tonkagunner]

Something similiar happened when we were having elecricity shortage in US. Everything was fine for years, but suddenly problem was being blamed on people having bigger tvs, and computers that use too much electricity. Of course this was all B.S.

Now, problem is being blamed on China. Gas was fine a year or so ago. Problem is not China. This is BS.

[tonkagunner]

Originally posted by tonkagunner
Something similiar happened when we were having elecricity shortage in US. Everything was fine for years, but suddenly problem was being blamed on people having bigger tvs, and computers that use too much electricity. Of course this was all B.S.

Now, problem is being blamed on China. Gas was fine a year or so ago. Problem is not China. This is BS.

There is no oil shortage. Problem is Bush has scared OPEC and now they are slow to release oil. Of course Bush won't release emergency oil reserves because that might lower prices. He wants oil prices high so he can offer land to oil companies in Alaska for next to nothing.

[FlyingIguana]

fuck bush, everything is his fault

if i don't make a sale, his fault


if i don't get laid tonight, his fault

everything comes back to him

[Lykos]

Too fucking long man!!!