Copper Market Insights
The world’s biggest miner, BHP Group, expects a continued growth in end-user demand in China, albeit at a slower pace compared to previous years. The company anticipates increased investment in lower greenhouse gas technology for energy and transport to support this growth.
Moreover, a modest recovery in OECD copper demand is on the horizon. BHP Group predicts a broadly balanced market for the upcoming year, a shift from previous forecasts indicating a modest surplus. This adjustment is attributed to reductions in primary supply announced by copper producers towards the end of the last year. The company highlights that uncertainty in primary supply remains a key factor influencing market dynamics.
Steel Market Projections
Looking ahead, BHP Group foresees a slight improvement in global steel production over the next two years. Growth is expected to be driven by regions such as India, Southeast Asia, and to a lesser extent, China. The company notes that reduced drag from developed regions will also contribute to this growth.
Despite challenges faced by the real estate sector in China, steel production remained strong in the country throughout the previous year. China has consistently produced over 1 billion metric tons of steel for the past five years. Furthermore, growth in infrastructure, machinery, autos, and net steel exports reaching a seven-year high has offset weaknesses observed in the real estate sector.
Steel and Iron Ore Insights for 2024
In CY24, we anticipate modest growth in steel production. The expectation is in line with the long-held view that China’s steel production will plateau in the range of 1.0 to 1.1 billion tons per annum in the first half of the 2020s.
Iron Ore Market Outlook
Conditions in the iron ore market improved in CY23, showcasing a broadly balanced overall market. Despite some pricing volatility within the year, we foresee similar dynamics for the mass balance in CY24. However, both supply and demand growth are expected to slow somewhat compared to the prior year.
The low-cost supply is not expanding fast enough to replace high-cost production necessary for market balance. Our estimate of real-time cost support remains steady in the US$80-US$100/ton range on a 62% Fe CFR basis, unchanged from previous reporting periods.
The effectiveness of China’s stimulus policy implementation, particularly in real estate, and the government’s decisions on regulating steel production will be significant factors influencing CY24.
Metallurgical Coal Market Analysis
In the near term, a modest supply recovery from Australia into the seaborne market is expected based on public company guidance. Assessing China’s role in the seaborne trade in CY24 will depend on uncertainties such as the availability of land-borne imports and the operational performance of Chinese domestic mines.
Regarding seaborne demand, India is anticipated to maintain its strong momentum, while OECD importing regions are likely to see a gradual increase in their steel industries.
