2018/01/16

BHP sees softer iron ore market

Foreign trade has entered a difficult environment, how do you see the foreign trade iron ore industry? Mining giant BHP Billiton said it expected a slightly softer iron ore market in 2018, given construction is likely to grow at a slower pace globally.

"The iron ore market in 2018 will be volatile and more focused on high-quality products," said Arnoud Balhuizen, chief commercial officer of BHP.
"The change of China's development blueprint of focusing on economic quality and sustainability, from economic speed, has had an effect on the sector in the past year," Balhuizen said.

"Trends toward low emissions and high-quality products ask for more high-quality resources, and BHP is a company with lots of resources, which makes us a natural partner for Chinese companies."

image credit: internet
Australia said on Monday that it expected iron ore prices rise to average $51.50 a metric ton this year. That's a 20 percent decrease from 2017, thanks to rising global supply and moderating demand from top importer China, as its steel sector shrinks.

The China Iron and Steel Association also said it believed imported iron ore prices will not continue to rise, due to rising supply, high port inventories and more available steel scrap.

The rise in imported iron ore prices in the past couple of months was abnormal and the industry must be sober-minded about the oversupply of imported iron ore in the long term, said Jin Wei, head of the association, at a meeting held in Beijing on Saturday.

According to data released by the General Administration of Customs on Friday, China's iron ore imports increased by 5 percent year-on-year in 2017, hitting a record high of 1.08 billion tons.

But Balhuizen said, considering the market in 2017 was stronger than the previous year, consumption continues to be strong, and the robust demand from China's Belt and Road Initiative, he remains confident in the company's business and cooperation with China in the upcoming year.

BHP said that it expected projects involved with the Belt and Road Initiative will drive up to 150 million tons of steel demand, which will positively affect BHP's global business layout.

Of that amount, 80 percent would be used in structures and reinforced concrete, with 20 percent going into machinery and other equipment. Spread over a 10-year period, this amounts to an additional 15 million tons per annum, or 3 to 4 percent incremental demand growth for steel in regions participating the Belt and Road Initiative, the company said.

The demand for infrastructure investment in countries and regions participating the initiative is huge, and such investment will drive significant demand for construction materials and equipment, leading to an increase in direct and indirect demand for steel, Balhuizen said.

"This is a considerable lift, as it doubles the growth rate of local steel demand observed since 2011, and we firmly believe that China will double its accumulated stock of steel in use, which is currently between five and six tons per capita," he said.


According to the Mining giant BHP Billiton, Chinese steel production is yet to peak and it will be increase in 2018.

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