Yesterday Noble, the Singapore-listed commodity business announced a 40% increase in profits for the first nine months to $31.8 million on turnover that was up 48% to $3.2 billion - a record for the company. Its growth is being fuelled by China, and we spoke to its CEO, Richard Elman about China and its surging demand for commodities.

Is China and its growing need for commodities the big factor driving your results?

Elman: The industrial growth of China is motoring away and it's behind our results. Steel is key where you have an increase of around 30 million tonnes of capacity this year and planned again for next year, and there's a shortage of raw materials, particularly iron ore. This in turn is driving the freight, and we're the recipient of industrial growth in China. It's a lifetime of effort that's suddenly started to pay off. It's the pipeline from Mongolia, it's the highways, the railroads, the steel, plus the Olympic games and construction in general.

Next year China plans to have 260 million tonnes of capacity in steel. Japan's production capacity is about 110 million tonnes flat out, so it's already two and a half times the production capacity of Japan. That gives an idea of how big it is getting.

So your equity story now has become remarkably simply. You are a leveraged play on China's growth.

That is the good news. But we have the rest of our business, and it's also doing well. But it pales somewhat by comparison with China. On the other hand, the China growth story won't continue forever, and will level out and hit equilibrium in the next 36 months - and we have our other businesses which are vibrant and growing. So we are not totally dependent on China. We are a global business that looks at a variety of different commodities. It just happens that the shipping side and iron ore have been star businesses.

From your vantage point, you see the world's commodity prices continuing to go up because of the China story?

Yes, the China story, plus exchange rates. In fact, it is a very long story that started 15 years ago when the Eastern Bloc opened up and there was a flood of raw materials that hit the West that had previously not been available. That created a huge deflation in commodity prices and was particularly exacerbated in the last five years by a very strong US dollar. That drove down prices because they all trade in US dollars. Even with very low growth in OECD markets, production starts to get absorbed and we ended up with a very balanced situation. Then suddenly you got exponential demanding coming from China. Subsequently you had a shortage. In coal and iron ore this year you had an extra 80 million tonnes to transport. You can't just bring in ships in 24 hours - they're either there or they're not. So that drives up freight. Then that gets exacerbated by congestion at ports, so instead of a ship doing 10 trips a year it's only doing 8. That compounds the whole thing. It's a complicated story that is demand-side driven, but eventually supply will catch up.

There are a few different views on China and steel. Some wonder whether it is not building too much capacity and it could be a bubble. What's your view?

Theoretically if you take the steel consumption per capita of developed countries and you multiply it out to what China needs, if they were to start consuming steel to the extent the Japanese do, they need 700 million tonnes per year. That, of course, is assuming incomes go up to Japanese levels, but if I sit back here today and you ask me will it be that in 20-30 years time I have no reason to doubt it. Deng Xiaoping chose 50 years because he said in 50 years China will be at the same level as Hong Kong. It'll be a lot faster than 50 years the way things are going.

Will it go in a straight line? The answer is clearly, no. It will have ups and downs. But the internal demand for everything in China is growing so strongly that projecting forward I could see everything being produced just for domestic demand and very little for export at a certain point of time. The buying power just keeps increasing every day. Will there be surplus steel? There will be at a certain point of time. But I don't have a crystal ball. If I had to make a guess, we have another one good year, possibly two, but after that I cannot say.

And will China be a net exporter of steel? Very possibly. Then again, that's also good for Noble.

Noble is also involved in wheat. Some investors also think wheat is a good investment because China is moving towards a more Western-style wheat-based diet? Do you see that too?

China's definitely moving towards a more Western-style diet and there is definitely less arable land available and as these cities develop the planting decreases. At the moment they are pretty self-sufficient in wheat although there is talk of buying a slug from the US - although that might be more for political reasons. They have been an exporter of corn for the last couple of years to the tune of 15 million tonnes per year, but that seems to have slowed down. There is growth in agricultural demand of 4-5% per year but it tends to be less than on the industrial side. Although soya bean oil demand is growing at 13% per year. So there will be some new dynamics on the agricultural side, but it is very much influenced by the government.

But I wouldn't be surprised to see China importing wheat and corn.

Your net income was up 40% and the share price was up by 10% today. Since the beginning of the year it is up over 140%. Clearly you must be getting your message across to institutional investors?

There's no doubt about it. We did a placement about a month ago of $75 million and it was placed with the crème de la crème of investment managers. People are starting to take notice of us now, much more than before. The most important number I can give you is that we made a 28% return on equity.

And if you are a believer in the commodity story you are a good stock to own?

We are a proxy for the China market, the Indian market and the Indonesian market.