http://www.dailyfinance.com/2009/09/04/china-set-to-increase-foreign-investment-limits-to-1-billion/

1) Copper shipments were bid up on fiscally inspired consumption and stockpiling (up to 400,000 tonnes)
2) Coal/oil ratio may be trading on the low side but expect a lower oil price will fix this
3) Steel stocks are neither undervalued nor are the price assumptions behind the broker assumptions. Steel capacity utilisation has been high off the fiscal stimulus but stockpiling has now kicked up. Witness its price weakness over the last couple of weeks.
4) OECD demand has to go a long way before it recovers its 2008 glory.
5) China relies on exports for its growth – its whole economy is geared around this. It will take years for domestic consumption (other than the government) to make a material difference to world demand.
6) I’ll have to take their word for it (but they don’t have great form on this front)
7) Consolidation is not going help commodity prices – that is just silly. China’s 72 steel producers lost money is the first quarter of 2009, the government is sponsoring the consolidation and Goldman’s thinks that they will let the likes of BHP continue to run at 40% EBIT margins?
8. I though this was covered in point 3?

Better get back to my therapist…

“The main cause of the surge seems to be a statement made Liu Xinhua, vice chairman of the China Securities Regulatory Commission, at a forum in Beijing yesterday which was proclaimed on the front pages today of China’s two biggest financial newspapers, the China Securities Journal and the Shanghai Securities News. Mr. Liu promised that regulators will promote a “stable and healthy” market. This has been interpreted to mean that the authorities will not let the market continue falling, and will introduce measures to force it up”
….
“Without rapid future consumption growth, as I have argued many times, I just don’t see how China can support rapid GDP growth once the huge fiscal push becomes unsustainable and runs out of steam.”

http://mpettis.com/
Michael Pettis is a professor at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets

I agree with you MS.

See recent comments on falling iron ore prices: (http://business.smh.com.au/business/iron-ore-price-slump-may-hit-bhp-billiton-and-rio-20090903-f9yb.html).

Which means no recovery in coal prices.

I suspect this note/paper by GS has been 3 months in the making. And now out of date.