Kelvin Schulle submits:
China’s $680B stimulus is boosting the economy faster than many westerners expected. Q3 GDP was 8.9% on a annual basis. It was reported that China may reach double digit growth in Q4 as the stimulus kicks in full speed. The second largest economy in the world may reach self sustainability in 2010. The G20 meeting over the weekend confirmed that stimulus around the globe will remain intact till 2011. As a result, demand for raw materials will pick up quickly both in China and here in US.
One on the materials that is in strong demand is metallurgical coal. Part of the reason for that is China doesn’t produce high quality metallurgical coal and the domestic production is really low volume, and it depends on import from Australia and US to meet its demand. High quality steel products need high quality metallurgical coal. Earlier this year, China’s Chinalco tried to take stake in Rio Tinto (RTP) to lock the supply of iron ore and metallurgical coal from Australia. However the deal didn’t go through as Rio Tinto turned to BP (BP) for help on its funding shortage.