Steel demand in China is expected to be what BHP once thought.
HALIFAX – Just a couple of weeks ago I argued BHP and Rio should defend – in detail – their bullish steel demand forecasts in China given the growing number of forecasters that say the peak has already past.
Recall that Rio Tinto and BHP have long stuck to forecasts putting peak steel demand in China at, or over, a billion tonnes a decade or so from now. Others see it behind us already.
Well, I haven’t seen that defense, yet. We got a major revision of steel demand announced to the market instead.
In outlining its year-end financials August 25, BHP slashed its forecast of Chinese demand a decade or so from now by some 100 million tonnes steel.
A half year ago BHP argued peak demand would come in the mid-2020s somewhere around 1 billion to 1.1 billion tonnes.
Now it says that peak will be between 935 to 985 million tonnes steel around 2025. That’s some tweak and important I think for a few reasons.
First, some added context on the scale of revision. What is a 100 million tonnes steel? It equates to about 150 million tonnes iron ore (very roughly speaking).
And what’s that in miners? It’s a Fortescue Metals (~165 million tonnes/year), the #4 iron ore producer ex-China.
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