BHP Billiton: No Way Iron Ore Hits $100/Ton Again

By Admin
The days of iron ore prices riding the $100 a ton range are all but gone, says Australian minerBHP Billiton. The immediate future looks dim as the compa...

The days of iron ore prices riding the $100 a ton range are all but gone, says Australian miner BHP Billiton. The immediate future looks dim as the company is predicting a continued decline in steel consumption growth in China next year.  

"I've learnt never to say never and there's always short-term variations, but I think that if you use basic economics … certainly $100 seems high," Jimmy Wilson, President of BHP’s iron ore said on Thursday.

"It's hard to see that significant bump that we've seen coming from China happen again."

Although BHP had previously said the Chinese steel production growth would simmer around three percent for the next 10 years, the company now foresees that number dwindling more than anticipated.

"Consumption growth is about 1.5 percent this year and slowing to between 0.5-1.5 percent next year - we see modest to marginal steel consumption growth," said general manager for marketing and iron ore Alan Chirgwin.

This is the slowest rate of growth since 1990.

"We're not predicting a sharp curtailment of exports but if it does happen … steel demand will still be there elsewhere," said BHP’s president of marketing, Mike Henry. "We're here today to celebrate the relationship with China and the business here but ultimately we're selling to global markets."

Last week BHP’s senior management group was in Shanghai to celebrate the company’s shipping of its one billionth ton of iron ore to China.

"It took nearly 30 years for BHP Billiton to ship 100 million tons of iron ore to China and then only 12 more years to reach the one billion ton milestone," said chief executive Andrew Mackenzie.

Iron ore has surged in recent weeks after China cut interest rates for the first time since 2012. That hasn’t stopped the drop in prices as iron ore fell to under $70 a ton for the first time in five years. 

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