LONDON, U.K. - Vivek Tulpule, the chief economist at RIO TINTO, is saying that commodity prices have not yet peaked. "With low stocks and likely continuation of supply side difficulties, most commodity prices are expected to remain well above their long run trend over the short and medium term." His remarks were delivered to an investor seminar on Nov. 26, 2007.
Tulpule goes so far as to predict strong increases in demand for most metals and minerals through 2009. The continued strength is due to rapid growth in developing countries, notably China and India. His predictions for iron ore, aluminum and copper suggest that demand could double or even triple over the next 25 years.
That is the kind of good, long-term forecast the mining industry wants to hear. The up-and-down cycles endured by the mining industry in the past may be heading for more up and less down. Having reasonably high and steady prices would remove the greatest risk factor that mine investors face. A new level of certainty would be most welcome.
For all his optimism, Tulpule has spotted a cloud on the horizon - the faltering U.S. economy. But, he pointed out, the United States is now significantly less important in world commodity demand than it was even five years ago. The U.S.A. has been overtaken by China and India, and even a sharp downtrend in its economy would not have a devastating effect on demand.
If that's all the bad news ahead for commodity demand, it is outweighed by Tulpule's glowing predictions. The bottom line, he says, is for faster long-run average demand growth, extended medium-term price elevation, and higher long-run prices.
It's about time.
The complete presentation may be read by searching Rio Tinto Group at www.Newswire.ca. Look for the "Outlook for metals and minerals, investor seminar" in the results.