BHP-where to next?

[topcropper]

I don't know. I could be wrong and the China shutdown could be the only cause for the recent price drops and if it is so then get ready to pickup some cheap stocks at the end of it.

Probably agree that there is good buying coming up.



Now tell me this though, If you think commodities are in a bubble, then why the hell would you be geared up with Australian residential property? [I'm assuming you are, most here are, correct me if I'm wrong]. Can't you see that the good times we are having is to do with the resource boom?

Take away the exports and the income that our mineral and energy wealth contributes and it's a house of cards. We are left with almost nothing to sell to the rest of the world and pay back our massive debt, and it's frightening.

The US economy would be far healthier than the Aussie one without the resource boom.

I think the Poms are going to be hit harder than the US. Financial services were a much bigger part of their economy than the US, and even bigger than ours, and it's been devistated. Their north sea oil assets are rapidly declining, they have hardly any resource assets, other than the ones they own in other countries, and they are only producing 60% of their food requirments.

We will do well if the resource boom continues. We will be a basket case without it. So, why invest in Australian property if you think it's all a bubble? If resources are a bubble, then so is Australian housing.

See ya's.

 

[BV]

We will do well if the resource boom continues. We will be a basket case without it.
.

TC
I'll agree with your comment.

why invest in Australian property if you think it's all a bubble?
If resources are a bubble, then so is Australian housing.

Did I touch a nerve somewhere? I didn't mean to.
I should have mentioned earlier that grain, meat and other essential food prices should IMHO stay high so that we can maintain our farming industry.

I also think that we've all done well from the resources boom and I hope this continues.

To answer your question I am geared in property because I believe in it as a long term vehicle for my financial independence and not because I am a speculator.

I don't believe we have a housing bubble but if someone believes that property prices have gone up too far in particular regions because of speculation and they are now or in the future due for a correction it makes no difference to me because I am not investing there.

Cheers

 

[MichaelW]

Hi,

You guys might be interested in the attached pdf document. This is a key document doing the rounds in my business at the moment which looks at the potential future steel price.

In summary, despite falling demand in developed countries, steel prices are unlikely to come off through 2009. And, as these economies recover, steel has the potential to run to $1500/t for hot rolled coil (hrc) in 2010 representing a 50% increase on today's pricing.

I plan on tendering my Mona Vale MUH development next year as I want to beat the price increase through 2010.

Another document worth reading is the following link:

http://www.businessspectator.com.au/bs.nsf/Article/Chinas-squeeze-on-copper-H8TYZ?OpenDocument

My view is that by using their stockpiles at a time of lower demand, the Chinese appear to be using a fortuitous set of events to put the squeeze on the hedge funds. Last night copper fell again in a trading pattern that indicated hedge fund selling. What Xiao is telling us is that the second half of the year China will be back in the market, by which time they will be hoping that the current squeeze will have lead to lower prices.

So this message is similar to that coming from BHP and Rio Tinto – there will be sharp price fluctuations, but the underlying demand created by Chinese urbanisation and industrialisation, plus the difficulty the world is having lifting mineral production, will underpin long-term prices. What we are seeing is a classic squeeze to push the weak holders (badly financed hedge funds) out of the market.

In summary again, that suggests current commodity price softening is short term and price pressure will re-emerge in coming years as China's expansion continues unabated.

There's nothing new in all of this. Any BHP retraction represents a short-term buying opportunity. It might come back quite a way, but long term it remains a very solid buy.

Cheers,
Michael

 

[chilliaa]

Hi,

You guys might be interested in the attached pdf document. This is a key document doing the rounds in my business at the moment which looks at the potential future steel price.

In summary, despite falling demand in developed countries, steel prices are unlikely to come off through 2009. And, as these economies recover, steel has the potential to run to $1500/t for hot rolled coil (hrc) in 2010 representing a 50% increase on today's pricing.

I plan on tendering my Mona Vale MUH development next year as I want to beat the price increase through 2010.

Another document worth reading is the following link:

http://www.businessspectator.com.au/bs.nsf/Article/Chinas-squeeze-on-copper-H8TYZ?OpenDocument

In summary again, that suggests current commodity price softening is short term and price pressure will re-emerge in coming years as China's expansion continues unabated.

There's nothing new in all of this. Any BHP retraction represents a short-term buying opportunity. It might come back quite a way, but long term it remains a very solid buy.

Cheers,
Michael

sorry but cant disagree more. As China's % of GDP increases as as % of world GDP China has to slow down. China's rapid growth in GDP has been from a low base.
A few basic premises:
1) The rate of export growth in China will depend on the worlds ability to absorb those exports. As China grows bigger the ABSOLUTE increase in $ exports to achieve the same % rate of growth increases
2) How can the importing countries continue to finance China's exports on an increasing scale. Over the last decade this has been from China effectively exporting to the West and then providing the finance (hence China's massive foreign exchange reserves).
3) Massive investments are going into fixed assets. This has provided the catalyst for resources. However if factors 1 & 2 come into play, then a natural equilibrium will be reached where the growth in fixed assets will drop significantly. Unlike resources that need to be repetatively consumed (eg food), a fixed asset once greated has a long economic life and thus doesnt need to be replaced quickly.

I have no idea when China will slow down, but i know it cant keep going at this rate indefinately.

So in my opinion retail investors have to be very careful about the 'stronger for longer theory'. As i mentioned in another post, the better the story behind a stock, the easier it is to ramp the price above its real long term intrinsic value.

 

[MichaelW]

I have no idea when China will slow down, but i know it cant keep going at this rate indefinately.

chilliaa,

I actually agree with this point. I am not arguing that China demand for resources will remain strong indefinately, just that it will remain strong through their entire period of industrialisation. Japan went through its industrialisation cycle and put a fire under commodities then they came back as Japan reached developed nation standards. China is significantly bigger than Japan and will take a lot longer to industrialise, and India is following on the coat tails of China.

I believe a decade is probably the timeframe we're talking about, and at the end of the decade, an extra 2 billion people will expect industrialised nation living standards and have incomes to justify it. What will that do to the global world order? At present, Europe, the US, Japan and little minnows like Aus account for around 1 billion people if my rough mental math is close. So, in effect consumption at industrialised nation rates will triple or so over the next decade. That is going to transform the world as we know it. Peak Oil is not the only commodity that is going to rapidly grow in demand whilst having slow increases on the supply side.

I can't see the commodity super-cycle slowing down substantially any time soon. The industrialisation demand for commodities is going into infrastructure, not into exported manufactured doodads. Brace yourself, this is a once in human history event never to be repeated. Thankfully Australia has run its industrialisation race and is set to profit significantly as exporters of commodities as the worlds masses race to catch up. I want to be in for that ride. Sure, there will be the odd shock and setback along the way, but the main game will continue unabated. There's no stopping it now, they've got a whiff of what they want and are going to get it. Nothing can stop this global transformation now.

Cheers,
Michael

 

[chilliaa]

chilliaa,

I actually agree with this point. I am not arguing that China demand for resources will remain strong indefinately, just that it will remain strong through their entire period of industrialisation. Japan went through its industrialisation cycle and put a fire under commodities then they came back as Japan reached developed nation standards. China is significantly bigger than Japan and will take a lot longer to industrialise, and India is following on the coat tails of China.

I believe a decade is probably the timeframe we're talking about, and at the end of the decade, an extra 2 billion people will expect industrialised nation living standards and have incomes to justify it. What will that do to the global world order? At present, Europe, the US, Japan and little minnows like Aus account for around 1 billion people if my rough mental math is close. So, in effect consumption at industrialised nation rates will triple or so over the next decade. That is going to transform the world as we know it. Peak Oil is not the only commodity that is going to rapidly grow in demand whilst having slow increases on the supply side.

I can't see the commodity super-cycle slowing down substantially any time soon. The industrialisation demand for commodities is going into infrastructure, not into exported manufactured doodads. Brace yourself, this is a once in human history event never to be repeated. Thankfully Australia has run its industrialisation race and is set to profit significantly as exporters of commodities as the worlds masses race to catch up. I want to be in for that ride. Sure, there will be the odd shock and setback along the way, but the main game will continue unabated. There's no stopping it now, they've got a whiff of what they want and are going to get it. Nothing can stop this global transformation now.

Cheers,
Michael

I honestly dont know and there in lies the problem. For traders there are probably some very good opportunities because of the unknown.
For myself i will only buy a share with a vision of 5yrs minimum holding period. Because i cant get any insurance (for example through good and stable dividend streams) and i cant value BHP because of the uncertainty i avoid buying.

I agree with you on finite availability of oil and i think that although coal production can be increased to meet future supply, the VOLUME of coal increases should continue into the long term because it services electricity which is an immediate consumption resource.

 

[topcropper]

BHP is up nicely.

That's weird. I thought it would be in for a dumping after the happenings in commodity markets. Everyone knows BHP's profit and forward profit are going to be massive with the announcement tonight, so I thought it was all priced in?

Dunno.

 

[feihong]

classical pump and dump

 

[vla]

Personally BHP has already peaked. With the olympics closing China's demand won't be that great.

 

[Sunfish]

Personally BHP has already peaked. With the olympics closing China's demand won't be that great.

I love these one-line guesses presented as fact.

Tonight:
Cu up 4.5%
Ni up 6.8%
Al up 3.1%
Zn up 7.1%
Pb up 8.2%
Au up 2.6%
Ag up 4.2%

Best you ring all those silly Yanks and tell them China is going back to the dark ages now they've had their fun.

 

[BV]

Personally BHP has already peaked. With the olympics closing China's demand won't be that great.

It will be interesting to see what will happen to prices when the factories open up again after the olympics...

 

[Sunfish]

It will be interesting to see what will happen to prices when the factories open up again after the olympics...

..... and rebuilding after the floods and earthquake kicks into top gear.

 

[Jaffasoft]

G'day all this is a great thread i drop in every time i get a new reminder in my inbox. BHP will continue to be a strong company. Thought it time for an update on what i posted earlier on in this thread. Plus i didn't know where the hell BHP was or where is been the last lot of months. As i haven't had any or bought any or buying any. So here's the numbers! I been buying properties.

I told my Mortgage Broker to get out of the banks back in June and he's in misery. He had most of his egg in the one sector.

What's my thoughts for the future. I think steady as she goes. You can't slow a big ship down that quick. And when it does slow it will be when the big China backers start pulling there vested interest out of BHP shares and even then I think newer growing economy's emerging in that time in the future will keep BHP up there in the running reasonably strong.

Aug-08 38.73
Jul-08 39.71
Jun-08 43.70
May-08 43.50
Apr-08 42.27
Mar-08 35.81
25-Feb-08 $ 0.29 Dividend
Feb-08 39.58
Jan-08 36.78
Dec-07 39.85
Nov-07 42.67 <<<<<<November this year (2007).
Oct-07 45.76
10-Sep-07 $ 0.27 Dividend
Sep-07 44.22
Aug-07 37.88
Jul-07 36.48

This is what I quoted then. I was a little bit wrong but it went to $40.00 then over. Page 1

I think BHP will go to $40 by November this year (2007). This comment in this thread will serve as a time capsule for if I'm wrong or right! I don't think there will be a dip lower then $30 in the not to distant future.

Jun- 07 34.20
May-07 31.53
Apr- 07 29.51
Mar-07 29.89
26-Feb-07 $ 0.20 Dividend
Feb-07 27.13
Jan-07 25.86
Dec-06 25.13
Nov-06 26.05
Oct-06 27.09
4-Sep-06 $ 0.185 Dividend
Sep-06 25.45
Aug-06 27.32
Jul-06 27.39
Jun-06 28.61
May-06 27.85
Apr-06 28.90
Mar-06 27.62
27-Feb-06 $ 0.175 Dividend
Feb-06 23.92
Jan-06 25.27
Dec-05 22.28
Nov-05 21.42
Oct-05 20.32
Sep-05 21.79
Aug-05 20.04
Jul-05 18.96
Jun-05 17.78
May-05 16.34
Apr-05 15.71
Mar-05 17.50
28-Feb-05 $ 0.135 Dividend
Feb-05 18.75
Jan-05 15.82
Dec-04 14.92
Nov-04 15.02
Oct-04 13.47
Sep-04 13.96
Aug-04 12.77
Jul-04 12.81
Jun-04 12.18
May-04 11.76
Apr-04 11.15
Mar-04 11.92
Feb-04 11.92
Jan-04 10.98
Dec-03 11.85
Nov-03 10.96
Oct-03 11.40
Sep-03 10.27
Aug-03 10.63
Jul-03 9.53
Jun-03 8.40
May-03 8.36
Apr-03 8.79
Mar-03 9.02
Feb-03 8.90
Jan-03 8.67
Dec-02 9.87
Nov-02 9.84
Oct-02 9.42
Sep-02 8.80
Aug-02 8.86
Jul-02 9.27
Jun-02 10.01
May-02 10.50
Apr-02 10.50
Mar-02 11.08
Feb-02 11.46
Jan-02 10.96
Dec-01 10.21

 

[topcropper]

Personally BHP has already peaked. With the olympics closing China's demand won't be that great.

What possible reason has the olympics got to do with BHP peaking?
And is that peaking in share price or peaking in profit or peaking in production?

Just keep topping up on resource companies on the dips, and ride the next 15 years. easy.

See ya's.

 

[willair]

http://www.abc.net.au/news/stories/2008/08/24/2344880.htm
There has been talk about this happening for a long time 12% will quickly turn into 49.999999
%IMHO.. ..willair..

 

[LynnH]

Interesting. I wondered how long it would take for KRudd to start selling off Australia to his mates in China. I guess that means the end of any takeover of Rio by BHP.

Would be interested to hear others' views of the implications - positive and negative - of this decision.

Cheers
LynnH

 

[GreatPig]

According to Rio's 2007 annual report, Chinalco, through their Singapore business Shining Prospect, have already purchased a 12% holding in Rio Tinto PLC (ie. the UK operation) in February 2008. That already gives them significant voting rights over group decisions.

I assume this is then another 12% directly in the Australian business.

GP

 

[GreatPig]

I wondered how long it would take for KRudd to start selling off Australia to his mates in China

You mean this part of Australia?

Largest registered shareholder: Tinto Holdings Australia Pty Limited, 37.45%

Note: Tinto Holdings Australia Pty Limited is a wholly owned subsidiary of Rio Tinto plc (ie. it's British-owned).

Interesting that their 2007 annual report features a picture of Shanghai on the cover.

GP

 

[willair]

Speculation


Mr Kloppers refused to comment on whether the deal would go ahead without the merger of the two companies' iron ore businesses.
"It's very hard to speculate on things that we don't think are going to happen and that are not the base line that we are planning around," he said.
Rio Tinto has repeatedly rejected the BHP Billiton bid, saying it greatly undervalues the company as both firms enjoy huge demand for their raw materials from rapidly industrialising Asia.
China, for its part, has expressed concerns that the proposed merger would create a behemoth with too much control of world iron ore markets.
Since BHP's bid was first announced, China-owned companies have bought into Australian resource firms, including a raid by aluminium giant Chinalco for a strategic stake in Rio.
The moves have provoked debate in Australia about state-controlled Chinese firms - so-called China Inc - buying resources firms to directly control the resources needed for the country's industrial expansion.
Earlier Treasurer Wayne Swan said he had approved Chinalco's acquisition of up to 14.99 per cent of the London-listed arm of Rio Tinto - an amount which would equate to about 11 per cent in the group.
"I have determined that the undertakings agreed with Chinalco are acceptable for protecting the national interest in this matter," he said.
On China, Mr Kloppers said that while there had been some slowdown in the Chinese economy, the country's building program was still very strong.
"It's important to understand though that the Chinese economy is still growing at four, five times the developed world and that each unit of growth consumes five times the units of metal that a similar pace of growth in the western world would consume," he said.
Mr Kloppers said he still hoped that the merger with Rio would go ahead.
"We believe that our bid, particularly given the value of our company and the synergies, is a very attractive one," he said.
http://www.abc.net.au/news/stories/2008/08/24/2344985.htm

 

[topcropper]

http://www.abc.net.au/news/stories/2008/08/24/2344880.htm
There has been talk about this happening for a long time 12% will quickly turn into 49.999999
%IMHO.. ..willair..

A lot of this will be happening.

Just wait till China starts buying agricultural land to sure up their food supply. The middle east is already talking about that. They already know they can't feed themselves and never will be able to.

I predict a OFEC between food exporting nations will eventuate. OFEC could do deals with OPEC for quaranteed food for oil deals. Too bad if your not in either.

See ya's.