BHP Billiton has reaffirmed its optimism about the prospects for iron ore in the immediate wake of a record decline in spot prices which has weighed heavily on Australian mining stocks.
Speaking at the AJM Global Iron Ore and Steel Forecast conference Jimmy Wilson, BHP Billiton Iron Ore President, reaffirmed the company’s positive outlook for iron ore over the next decade as a result of ongoing Chinese demand.
“Our market outlook is for continued strong steel demand growth over the next 10 years. Our view that Chinese crude steel production is expected to peak at 1.1 billion tonnes, around 2025, is unchanged,” said Wilson.
“We remain confident that global demand for iron ore will continue to grow, though at a more moderate rate, driven by urbanisation and industrialisation.”
The timing of Wilson’s remarks would appear highly inauspicious, given that iron ore just recently posted its biggest one-day loss in over four years on the back of surprisingly poor export data out of China.
Official figures from China indicate that exports from the world’s second biggest economy fell 18 per cent in February, which sent prices for raw materials, including iron ore, copper and oil, into free fall.
Data from the Steel Index indicates that iron ore for immediate delivery to China plunged by 8.3 per cent to $104.70 per ton, for its biggest single-day percentage decline in roughly four and a half years.
The single-day slump brought the decline in spot prices for iron ore thus far this year to 22 per cent, and caused Australian mining shares, including globe-spanning giants such as Rio Tinto and BHP Billiton, to take a battering.
The key steelmaking ingredient remains one of Australia’s leading resource exports, as well as the chief source of revenue for both BHP and Rio.
In addition to remaining optimistic about the broader outlook for iron ore prices, BHP is also confident about its positioning within the sector given the high calibre of its supply sources.
“BHP Billiton will retain a favourable position on the iron ore cost curve underpinned by the quality of our resource base,” said Wilson. “These resources further position us to benefit from an increasing market preference for high quality lump and fines iron ore products.”