It seems prices of key steelmaking ingredient iron ore has seen better days, and is now nearing its glorious end.
BHP Billiton, the world's biggest miner, believed the global supply and demand for steel, which zoomed in recent years thanks to China's huge appetite, has reached its zenith. Although demand for iron ore will continue to grow, its growth however will be much slower compared in previous years.
BHP Billiton, the world's biggest miner, believed the global supply and demand for steel, which zoomed in recent years thanks to China's huge appetite, has reached its zenith. Although demand for iron ore will continue to grow, its growth however will be much slower compared in previous years. As such, the high prices that iron ore recorded in 2011 may not likely happen again.
As such, the high prices that iron ore recorded in 2011 may not likely happen again.
"Demand will grow less, and producers will be more prepared to meet that supply," Alberto Calderon, BHP Billiton's chief executive of aluminium, nickel and corporate development, told a resources conference in Canberra, Australia on Wednesday.
"We are already beginning to see the beginning of the end of the first stage of economic development in China," Mr Calderon said.
He said given China's expected growth rate to slow down to more sustainable levels in the range of seven to eight per cent in the coming years, the consequent global steel growth will likewise slow to about three to four per cent.
"The pace of demand for iron ore from China has slowed down by more than half, and the mining industry is expanding supply at a very considerable pace."
Moreover, China could most likely resort to using more recycled steel after 2025, thus furthering the lowering of prices.
"We won't see again this spectacular sort of imbalance between demand and supply that we have seen. But we still have many good years ahead of us," Mr Calderon said.
"This doesn't mean that the boom has ended. But it does mean that to expect that prices will continue to grow, or even stay at very high growth levels... you will do that at your our own peril."
Key steelmaking ingredient iron ore surged over $190 a tonne in 2011, but sank earlier this month to a three-year low of $86.70 before gaining back above $100.
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