BHP Expects Iron Ore Supply to Normalize in 1-3 Years -- Commodity Comment
19 Agosto 2019 - 09:27PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY--BHP Group Ltd. (BHP.AU), the world's largest miner by
market value, released its fiscal-year earnings report on Tuesday.
Here's what BHP had to say about metal and energy markets.
Iron Ore Supply to Normalize in 1-3 Years:
"In addition to the decline in Brazilian exports, prices have
responded to stronger than expected Chinese pig iron production and
cyclone disruptions to Australian supply. We expect supply
conditions will return to a more normal path on a one to three year
time frame, and prices are likely to be volatile as that adjustment
plays out. In the longer term, the marginal price-setting ton will
be provided by a higher-cost, lower value-in-use exporter from
Australia or Brazil."
China Import Policies a Cloud Over Metallurgical Coal
Outlook:
"The Platts Premium Low-Volatile Metallurgical Coal price index
reached a high in the middle of the 2019 financial year amid supply
constraints in Queensland. Prices eased from the peak on weaker
European demand and improved Australian supply. China's import
policies remain a source of uncertainty. Longer term, we expect
India to sustain strong demand growth, while high-quality
metallurgical coals are expected to continue to offer steelmakers
value-in-use benefits."
Copper Demand Will Steadily Rise:
"Copper prices have been heavily influenced by swings in global
trade uncertainty in the second half of the 2019 financial year.
Against this backdrop, we believe underlying fundamentals remain
sound. Copper demand should grow steadily. Grade decline, rising
input costs, water constraints and a scarcity of high-quality
future development opportunities continue to constrain the
industry's ability to meet this growing demand at low cost. Scrap
supply and aluminium substitution are constraints on the
upside."
Nickel Supply, Demand Seen in Sync in Near Term:
"Nickel prices have also been heavily affected by trade
uncertainty in the second half of the 2019 financial year. In our
view, growth in supply should keep pace with demand from
traditional uses in the near term. The electrification of transport
will require on-going investment in new sources of supply in the
coming decades."
Oil Outlook Remains Positive on Rising Demand:
"Crude oil prices were volatile in the second half of the 2019
financial year. Swings in global growth expectations, strategic
behaviour of major producers, falling production in Venezuela and
Iran, and geopolitical risk, all contributed to price volatility
over the last six months. The fundamental outlook remains positive,
underpinned by rising demand from the developing world and natural
field decline in supply."
Global LNG Prices to More Closely Align:
"The Japan-Korea Marker price for LNG was lower on average in
the second half of the 2019 financial year, reflecting slower
growth in North Asian demand and a large increment of new supply
from project ramp-ups. Longer term, we expect LNG to grow faster
than overall gas demand, with price formation progressing towards
global harmonization."
Potash Demand to Exceed Supply by Mid-to-Late 2020s:
"Potash prices continued their gradual upward trend in the
second half of the 2019 financial year, but weakness has recently
started to appear in some markets. Regional demand has been mixed
in the 2019 calendar year to date, with China the positive
standout. We expect annual demand growth of 2-3% over the next
decade, resulting in demand exceeding available supply from
on-stream, latent and forthcoming capacity by the mid-to-late
2020s."
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
August 19, 2019 20:12 ET (00:12 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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