SHANGHAI BHP Billiton Plc
is bearish on iron ore and coal prices in the short and long
term as a result of Chinas moderating growth and the
countrys transition to a more consumption-led
Chinas destocking and
lower steel demand from Europe, India and the Middle East have
led to sharp price drops for iron ore and metallurgical coal,
the diversified miner said.
"We do not anticipate any
material pricing upside in the near term" as subsequent
restocking has largely been completed, BHP chief executive
officer Marius Kloppers said at the companys annual
general meeting in Sydney.
The company is expecting
Chinas gross domestic product growth to be in a range of
7 to 8 percent in coming years, "lower than the double-digit
growth rates seen over the past decade" that had been based on
industrialization and urbanization.
"Chinas future needs will
change, and focus will gradually switch towards great
mechanization 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."
The miner noted that
Chinas transition also will lead to increased demand for
copper, energy products and potash fertilizer, which it is well
positioned to meet. BHPs diversification strategy reduces
its exposure and enables it to benefit throughout the commodity
cycle, it said.
BHP expects overall commodity
demand to increase by 50 to 80 percent in the next 15 years,
To remain cost-competitive in the face of the current
economic environment, BHP has carried out spending cuts by
slowing down some development projects and shutting down
several high-cost operations, and will continue to do so.
A version of this article was first
published by AMM sister publication Steel