Thursday, 13 October 2011
Mining giant BHP Billiton's chief executive ferrous and coal Marcus Randolph said at the 45th annual meeting of the World Steel Association (worldsteel) held in Paris on October 13, that steelmaking raw material prices, including prices of iron ore and coking coal, have increased significantly in the last 10 years since raw material demand has grown so fast that raw material producers have been unable to keep up.
Mr. Randolph stated that almost half of the seaborne iron ore trade is destined to China, while he predicted that the apparent steel consumption of China, which is currently a bit higher than 400 kg per capita will continue to rise for a while and then will begin to trend sideways at about 600 kg per capita. Thus, at some point the growth of China's iron ore demand is expected to slow down. According to Mr. Randolph's presentation, between 2010 and 2020 world iron ore demand will grow by four percent, while seaborne demand is expected to rise by five percent, as the seaborne trade is dominated by Chinese demand. As for coking coal, Mr. Randolph told attendees that, while China had been a net exporter of coking coal in the past, the country reached its coking coal production limit by 2008. As a result the growth in the seaborne coking coal trend differs from that for iron ore. Between 2010 and 2020, world coking coal demand is foreseen to rise by three percent, while seaborne demand is expected to increase by five percent in the same period.
In order to close the gap between demand and supply, Randolph said that huge investments are being implemented. Between 2010 and 2020, iron ore production in Australia is expected to increase by 15 percent, iron ore output is predicted to rise in Brazil by 12 percent, by 49 percent in West Africa and by three percent in India. However, supplies may still fall short even if all these projects are completed, the BHP Billiton official warned.
As for coking coal, between 2010 and 2020 coking coal output in Australia is expected to increase six percent, the output is predicted to grow by 15 percent in China, by 14 percent in Russia, five percent in Canada and 39 percent in South Africa.
Marcus Randolph defended the short-term pricing system, stating that the annual negotiations result in the buildup of large debts from the difference between the old price and the new price, and that deliveries get cancelled when spot prices are below the contract price or when low cost suppliers have been forced to cut production. Randolph said that market pricing mechanisms are now more transparent and the development of forward markets gives customers financial management tools.
Finally, Mr. Randolph told attendees that he expects iron ore prices to come down; however, the speed with which this happens, he said, will depend on project developments in Africa, Mongolia and Russia.
Tags: iron ore , coking coal , raw mat , Australia , China , Oceania , Far East , BHP , conferences , steelmaking , East Asia and Pacific
(sourced steelorbis)
Mining giant BHP Billiton's chief executive ferrous and coal Marcus Randolph said at the 45th annual meeting of the World Steel Association (worldsteel) held in Paris on October 13, that steelmaking raw material prices, including prices of iron ore and coking coal, have increased significantly in the last 10 years since raw material demand has grown so fast that raw material producers have been unable to keep up.
Mr. Randolph stated that almost half of the seaborne iron ore trade is destined to China, while he predicted that the apparent steel consumption of China, which is currently a bit higher than 400 kg per capita will continue to rise for a while and then will begin to trend sideways at about 600 kg per capita. Thus, at some point the growth of China's iron ore demand is expected to slow down. According to Mr. Randolph's presentation, between 2010 and 2020 world iron ore demand will grow by four percent, while seaborne demand is expected to rise by five percent, as the seaborne trade is dominated by Chinese demand. As for coking coal, Mr. Randolph told attendees that, while China had been a net exporter of coking coal in the past, the country reached its coking coal production limit by 2008. As a result the growth in the seaborne coking coal trend differs from that for iron ore. Between 2010 and 2020, world coking coal demand is foreseen to rise by three percent, while seaborne demand is expected to increase by five percent in the same period.
In order to close the gap between demand and supply, Randolph said that huge investments are being implemented. Between 2010 and 2020, iron ore production in Australia is expected to increase by 15 percent, iron ore output is predicted to rise in Brazil by 12 percent, by 49 percent in West Africa and by three percent in India. However, supplies may still fall short even if all these projects are completed, the BHP Billiton official warned.
As for coking coal, between 2010 and 2020 coking coal output in Australia is expected to increase six percent, the output is predicted to grow by 15 percent in China, by 14 percent in Russia, five percent in Canada and 39 percent in South Africa.
Marcus Randolph defended the short-term pricing system, stating that the annual negotiations result in the buildup of large debts from the difference between the old price and the new price, and that deliveries get cancelled when spot prices are below the contract price or when low cost suppliers have been forced to cut production. Randolph said that market pricing mechanisms are now more transparent and the development of forward markets gives customers financial management tools.
Finally, Mr. Randolph told attendees that he expects iron ore prices to come down; however, the speed with which this happens, he said, will depend on project developments in Africa, Mongolia and Russia.
Tags: iron ore , coking coal , raw mat , Australia , China , Oceania , Far East , BHP , conferences , steelmaking , East Asia and Pacific
(sourced steelorbis)
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