The revision by BHP, the world’s biggest miner, contrasts with rival Rio Tinto Group whose most recent forecast is that China will produce 1 billion tons of steel by 2030.
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In response, the company’s share price dived 15.5 cents to $1.76 as of 1015 AEST. Despite the reduced outlook for peak steel demand, Mr. Mackenzie said China’s leaders had a clearly articulated strategy, and that his company had adapted accordingly.
While steel demand in China is expected to improve towards the end of the year, the current position is that steel prices are falling because of a weaker macro economy and a “deeper supply glut”, according to China Metals, a Xinhua News Agency publication.
In a note, Commsec market analyst Tom Piotrowski said Fortescue was at the whim of China. “Mining companies are usually the most optimistic about demand conditions”. “In a broad way, it feels like we’re back where we started in 2009”.
Ore with 62 percent content slumped 21 percent this year to $56.10 a dry metric ton on Friday, according to Metal Bulletin Ltd., as demand growth stalled in China, the largest buyer.
“However with steel stock per capita still well below that of developed nations, we expect moderate but sustainable growth in Chinese steel production over the next decade”. “An extended view on the life cycle of steel usage has resulted in a lower but longer plateau for crude steel production”.
China’s peak steel forecast had been one of the most widely observed growth barometers in the WA resources sector, which has irreversibly tied itself to the Middle Kingdom’s urbanisation and industrialisation program.
Chinese steel production fell by 1.3% in the second half of the 2015 financial year, triggered by a slowing in construction.
There wasn’t any suggestion by Mackenzie or in BHP’s results presentation that iron ore output will be scaled back, in fact it was forecast to rise to 270 million tonnes in the 2015-16 year, up from the 254 million in the year ended June 30.
“China is moving from commodity importer to exporter”, Ugur Dalbeler, CEO of Turkish steelmaker Colakoglu Metalurji, said in an interview.
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On another big day in the life of China’s economic evolution, the People’s Bank also relaxed its reserve requirement ratio, which mandates the amount of cash banks must keep on hand, by 0.5 percentage points to underscore how desperate Beijing is to meet the government’s 7 per cent growth target.
