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High commodity prices have solid basis: IMF.

Australasian Business Intelligence, September, 2006

Byline: John Garnaut

Sep 06, 2006 (The Sydney Morning Herald - ABIX via COMTEX) -- Global non-fuel commodity prices have been high due to increased worldwide consumption. An International Monetary Fund analysis disputes the claims that speculative activities have driven the trend, allaying fears in Australia of a potential burst in commodity prices. IMF modelling suggests that aluminium and copper prices will gradually decline by 2010 as increased demand will be met by expansion in supply. The oil price is expected to remain high due to market inefficiencies and limited reserves. China has accounted for half of the rise in world consumption for aluminium, copper and steel, and almost all of the increase in consumption for nickel and tin.

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