BHP bearish on iron ore, coal - bullish on Cu and
From Metal Bulletin, Nov. 30, 2012
BHP bearish on iron ore, coal
BHP Billiton is bearish on iron ore and coal prices in both the short and long term as a result of China’s declerating growth and the country’s transition to a more consumption-led economy.
Chinese destocking and lower steel demand from Europe, India and the Middle East have led to sharp drops in the prices of iron ore and metallurgical coal, the Anglo-Australian diversified miner said.
“We do not anticipate any material pricing upturn in the near term as subsequent restocking has largely been completed,” BHP ceo Marius Kloppers said at the company’s 2012 annual general meeting on November 29 in Sydney.
The company is expecting China’s GDP growth to be in the range of 7-8% in the coming years, lower than the double-digit growth rates seen over the past decade which were based on industrialisation and urbanisation.
“China’s future needs will change and focus will gradually switch towards greater mechanisation to drive productivity growth and to the next level of consumer goods,” BHP said.
The transition will “naturally result in an eventual moderation of demand for commodities such as iron ore and coal”, it added.
The miner also noted that China’s transition will lead to higher demand for copper, which it is well positioned to meet. Its diversification strategy reduces its exposure to the global economic recession and enables it to benefit throughout the commodity cycle, it said.