While the iron ore market continues to navigate fluctuating price conditions, BHP has affirmed the commodity’s bright future.
The major miner admits that future iron ore demand from China is likely to decrease; however, this will be offset by other developing regions of the world.
“Wood Mackenzie projects 170Mt (million tonnes) of import demand from developing Asia in 2050, roughly 130Mt higher than today, and a little over 600Mt of ore consumption, up from a little less than 250Mt today,” BHP’s vice president – market analysis and economics Huw McKay said in an investor briefing this week.
McKay said Wood Mackenzie projected roughly 50Mt of iron ore imports would go to India in 2050, with Indonesia also importing 50Mt and Vietnam importing 60Mt.
“This growth is an important offset for the projected decline in China,” he said.
According to its own analysis, BHP found that in a 2°C scenario – which is globally considered the accepted temperature increase to avoid potentially catastrophic changes to the planet – China will make up 59 per cent of contestable iron ore demand in 2050.
In addition, ‘developing Asia’ will make up 17 per cent of contestable demand in 2050 and ‘developed Asia’ will make up 11 per cent of contestable demand.
BHP found that China comprised 77 per cent of contestable iron ore demand in 2021, while developing Asia accounted for only 1 per cent.
“In my mind, ‘resilient’ is the word that best describes this outlook for iron ore demand,” McKay said. “This underscores the fact that we continue to see this industry as an attractive one for BHP.”
According to Mysteel, the price for 62 per cent seaborne Australian iron ore fines at the port of Qingdao was $US95.4 ($146.5) per dry metric tonne on September 30.