Global mining giant BHP Billiton said yesterday that Chinese iron ore demand appeared to be flattening as the world’s second-largest economy slows, but prices were expected to hold up.
BHP iron ore president Ian Ashby said he was confident that China would meet its five-year economic growth targets, but iron ore demand would soon hit “single digits if it’s not already there.”
China, the world’s largest consumer of raw materials, announced a growth target of 7.5 percent for this year, a marked downgrade from last year’s 9.2 percent growth and 10.4 percent in 2010.
Its economy swung to a trade deficit of US$31.48 billion last month, according to the latest figures, with crude oil and other raw materials imports soaring while exports were further hit by weak demand in Europe and the US.
However, Ashby said he expected iron ore prices, now at about US$145 a tonne, to hold at US$120 due to limits on China’s own production, and BHP saw a solid future for the key steelmaking commodity in the longer term.
“The pie is big and they are still growing their steel industry,” Ashby told reporters at an Australian mining conference.
Rio Tinto said it also remained confident in the iron ore outlook in China.
“Although the rate of GDP growth in China is more immediately slowing we remain confident on the basis of the figures we have seen of a soft landing, with solid growth for this year,” David Joyce, Rio’s managing director expansion projects, told the conference.
He said the world’s iron ore mines would have to produce an extra 100 million tonnes annually to meet Chinese demand in the next seven years, with global supply “still significantly lag[ging] behind possible consumption.”
“Five hundred million tonnes is required to satisfy expected demand growth and 200 million tonnes to replace high-cost supply exit,” he said.
Ashby said BHP was poised to respond to cooling demand, but “we haven’t slowed down any of the work that allows us to make a decision,” adding that its iron ore expansion project was going “full steam ahead.”
BHP chief Marius Kloppers warned last month that the company stood ready to scale back production at unprofitable operations as commodity prices fluctuated.
Iron ore had been the exception, with Kloppers saying it would take a “fairly big event” to knock expansion plans off course because freight costs were low and shipments were expected to be profitable even if prices softened.
By 2050 Ashby said 73 percent of China’s 1.4 billion population was expected to be urbanized, compared with 47 percent in 2010. Car production was forecast to boom 155 percent by 2025 to 28 million units per year.
Ashby said China’s steel production capacity would hit 1.1 billion tonnes by 2025, compared with 700 million tonnes presently.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS