Original by Sijia Chen, Observer.com.
Australia's largest mining companies, BHP Billiton, Rio Tinto and Fortsk Metals Group, reported earnings this week, according to Nikkei Asia on February 23**. All three mining giants said that despite the continued pressure on China's real estate sector, China's demand in areas such as steel remains strong, and iron ore demand is expected to pick up.
According to the report, the three mining companies released financial reports showing that the iron ore business accounts for almost all of Fortske's earnings before interest, taxes, depreciation and amortization (EBITDA), as well as 70% of BHP Billiton and Rio Tinto EBITDA. China is the world's largest importer of iron ore, buying about 70% of the world's seaborne iron ore and producing half of the world's steel, according to Refinitiv's market data.
The chiefs of all three mining giants said that while the property sector downturn has hurt Chinese developers, growth in sectors such as infrastructure, machinery, auto manufacturing, shipbuilding, consumer goods and green energy has offset the weakness in the property market.
On October 9, 2023, in Ma'anshan, Anhui Province, workers are rushing to make order products in the workshop of China Baowu Masteel Co., Ltd. Escote Steel Co., Ltd. Source: Visual China.
BHP chief executive Mike Henry said that China's steel production is expected to remain above 1 billion tonnes in the outlook for the year ahead, "which is a very positive performance because some of the very good performing areas of the Chinese economy are actually still steel-intensive." ”
In the medium to long term, BHP will need to focus on keeping production costs low to compete as China's iron ore demand is likely to "level off", Henry said. He expects BHP to supply more iron ore from its mines in Africa and the Pilbara region of Western Australia.
Rio Tinto chief executive Jakob Stausholm said Rio Tinto believes China's economy is very strong, and although China's real estate sector has shrunk, other sectors are still strong, and the growth of infrastructure has boosted demand for steel.
This view was echoed by Dino Otranto, CEO of Fortsque, who noted that China's demand for steel is becoming more diversified. "What surprised us was the automotive industry, but also China's ongoing decarbonization efforts. "We're seeing extremely steady demand, especially for our products." We expect the market to be quite strong. ”
Maximilian Court, an analyst at Benchmark Minerals Intelligence (BMI), a British consultancy, believes that although the pressure on the real estate sector has had a certain impact on China's construction industry, the potential demand for buildings and infrastructure has kept the market in balance when it is quite stable.
"When it comes to China, some people say, 'We've peaked in steel production, growth is going to be sluggish, **will**,'" said Coat. But China produces more than 1 billion tonnes of crude steel a year, even if production falls by 03%, which is also more than the rest of the world combined. ”
Justin Smirk, senior economist at Australia's Westpac Bank, pointed out that as China's steel production stabilizes at around 1 billion tonnes, iron ore miners are increasingly focused on production efficiency, "Big iron ore miners are now more like factories, they strive to be the most efficient producers rather than focusing on production growth." ”
Smerk noted that during the mining boom about a decade ago, mining companies were more focused on how to mine new mines and get them into production as quickly as possible, "and now the question is who can get enough iron ore at the cheapest price." ”
On December 19, 2023, a cargo ship loaded with 400,000 tons of iron ore was unloaded at Lianyungang Terminal, Jiangsu Province Source: Visual China.
According to data released by the National Bureau of Statistics, in December 2023, China's crude steel output was 67.44 million tons, a year-on-year decrease of 149%；The output of pig iron was 60.87 million tons, a year-on-year decrease of 118%；The output of steel was 108.5 million tons, a year-on-year increase of 15%；The output of coke was 41.28 million tons, a year-on-year increase of 48%。
In 2023, China's crude steel output will be 101908 million tons, the same as the previous year; The output of pig iron was 871.01 million tons, a year-on-year increase of 07%；The output of steel was 136268 million tons, a year-on-year increase of 52%；The output of coke was 492.6 million tons, a year-on-year increase of 36%。
According to China News Service, Tan Chengxu, president of the China Iron and Steel Association, said at the sixth meeting of the sixth general meeting of the China Iron and Steel Association held in Beijing on January 12 that in 2024, the international and domestic situation facing China's steel industry is still complex and severe, with opportunities and challenges coexisting. The opportunity comes from the rebound of China's economy, the advantages of the super-large-scale market and the potential of domestic demand provide a broad space for the development of the steel industry; The challenges come from the lack of effective demand, the rapid release of production capacity, weak social expectations, and hidden risks, and efforts are still needed to improve the dynamic adaptability of steel supply and demand.
Tan Chengxu said that the steel industry should give full play to its subjective initiative, strictly control the expansion of production capacity, implement output control, carry out collaborative self-discipline, and strive to form a higher level of dynamic balance between demand and supply and demand.
*|Observer.com.
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Australian Mining Big Three: China's economy is still very strong, and some industries are surprising Chen Sijia
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Original title: "The Big Three of Australian Mining: China's Economy is Still Very Strong, and Some Industries Are Surprising".