Noble Says Commodities Are Bottoming, Will Rebound (Update3)

By Glenys Sim and Paul Gordon

Nov. 11 (Bloomberg) -- Noble Group Ltd., the commodity supplier that more than doubled third-quarter profit, forecast a rebound in demand for metals and grains over the next 12 to 18 months as government investment programs boost economic growth.

``I'm seeing the bottom,'' Chief Executive Officer Richard Elman said today in an interview in Singapore. ``I wouldn't be surprised to see in a year to 18 months' time we take off again.''

China, the fourth-largest economy and one of Noble's principal markets, will spend 4 trillion yuan ($586 billion) to lift growth battered by the credit crunch. Commodity producers worldwide including Cia. Vale do Rio Doce, the largest iron ore shipper, have been cutting output as demand slows and prices drop.

``Overall, the trend would be upwards'' for commodity demand, said Nirgunan Tiruchelvam, an analyst at ABN Amro Asia Securities (Singapore) Pte. Still, there's ``no doubt that the next year would be difficult,'' he said.

Noble plunged 44 percent in the third quarter in Singapore trading and extended declines last month as the credit crunch worsened. Still, the shares have rebounded since the company said on Oct. 28 that its business remained sound. They closed at 97 Singapore cents today after dropping 11 percent.

Noble's forecast for a recovery tallies with that from Rio Tinto Group, which said Nov. 10 that the slowdown will be short and China will be rebound next year. The world's second-largest iron ore exporter is cutting output from mines in Western Australia by 10 percent.

`Renewed Vigor'

``There'll be renewed vigor for most countries to revitalize their economies,'' Elman said. ``The Chinese are putting a lot of money into infrastructure.''

China's stimulus package, announced on Nov. 9, pushed the price of copper and silver higher yesterday and helped equity prices advance in Asia. The $3.3 trillion Chinese economy accounted for about a quarter of world growth last year.

Noble's third-quarter profit rose to $148.8 million, or 4.41 cents a share, from $61 million, or 1.89 cents, a year earlier, the Hong Kong-based company said yesterday in a statement after the close of trade. Sales increased 66 percent to $9.4 billion.

``We have the advantage of experiencing 1997,'' Elman said, referring to the Asian financial crisis, when regional currencies and equities crashed and the International Monetary Fund led bailouts of Thailand, Indonesia and South Korea.

`New Airports'

What happened ``was the governments in Asia started to build new airports, new roads, and that's what started to revitalize the economies,'' Elman said. ``This is deja vu.''

China's 10-point plan allocates money for affordable housing, rural infrastructure, railways, power grids, social welfare to raise incomes and rebuilding after the May 12 Sichuan earthquake. The country is the world's largest user of steel, copper, zinc, lead, nickel and aluminum.

``I think the Chinese are pragmatic,'' he said ``I think they will revitalize the economy and we're very encouraged.''

Cash prices of iron ore imported by China, the world's biggest buyer, rose for the first time in six months last week, according to data released on Nov. 7. The increase followed gains in construction steel products.

``We've seen a resurgence in imports of iron ore recently,'' Elman said ``We've seen a leveling of steel prices internationally so we're encouraged that the bottom may be here.''

Noble's energy division, which accounts for about half of revenue, reported an 81 percent gain in third-quarter sales to $4 billion, yesterday's statement said.

Metals and minerals including iron ore rose to $1.85 billion from $1.1 billion, revenue from agriculture gained 59 percent to $3 billion, and logistics advanced 17 percent to $453 million.

``Generally speaking, everything's in very good shape,'' said Elman, who spoke in interviews with Bloomberg Television and a reporter. ``I hope we can continue to produce record results. That certainly is our intention.''