BHP optimistic on steel demand, iron ore
afr.comBHP’s chief commercial officer Vandita Pant is optimistic China’s housing market policies could buoy already strong demand for iron ore, generating “strong momentum” for the steel-making commodity into next year.
Beijing’s moves to stabilise China’s ailing properly sector could trigger higher demand for steel and tighten the iron ore market, which has been squeezed by infrastructure firms and manufacturers showing stronger than expected appetite for steel, Ms Pant told The Australian Financial Review.
BHP chief commercial officer Vandita Pant in Melbourne. AFR
Iron ore prices collapsed earlier this year as weak demand fuelled concerns that China’s economic rebound from coronavirus lockdowns had faltered amid fears of property giants like Evergrande collapsing.
But healthier than anticipated demand from steel mills triggered an unexpected price rally for iron ore, Australia’s largest export.
The price of iron ore delivered into the northern Chinese port of Qingdao has lifted 20 per cent since late May to $US122.76 on Monday. Iron ore, the crucial ingredient for steelmaking, has been BHP’s biggest earner for more than a decade and delivered almost 64 per cent of the company’s underlying earnings in the year to June.
“Iron ore demand is very strong in China given that currently Chinese steel production is at record high – highest ever production run rate of 1.08 billion tonnes,” said Ms Pant, who runs BHP’s sales from its Singapore trading hub.
“There is very little iron ore inventory in the system. In fact, the total port side inventory in Chinese ports of iron ore is at the lowest of last four years.”
Swiss investment bank UBS has lifted price expectations for the commodity and, as iron ore is a major profit driver of
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