Not all commodities fell steeply under the weight of rising tariffs on iron ore riding stormy.
Iron Ore is the leading profit generator for the world's five largest mining companies, BHP Billiton, Fortescue, Vale and Anglo American, with iron ore falling from $103 to $98/ta over the past week, down about 5% over the past week, while copper and oil fell 15%.
Steel discs from a factory in Hefei, China. (Photography by Costfoto/Nurphoto via Getty Images)
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Iron ore may drop further, but the parity of $80/t may underwrite the profits of the world's largest miners, which could mean they will recoup some of their recent share price declines.
BHP Billiton and Fortescue lost nearly 10% at the peak of the tariff storm, and they have recovered about 2% of their losses.
If the U.S. sues China for the trade war continues to worsen, China could be forced to cut production in its huge steel industry, which would put pressure on two major iron ore exporters, Australia and Brazil, the fall could be reduced.
But not everyone is seeing the inevitable correction of iron ore price, and the necessary executives told Australian media yesterday that he believes there will be no sharp drop.
Stable steel output
Rag Udd, chief business officer at BHP Billiton, told the Australian Financial Review newspaper that Chinese steel manufacturers will maintain current productivity for several years, which will ensure iron ore prices exceed $80 per ton.
UDD's forecast comes ahead of U.S. President Donald Trump's latest tariff threat, who will reach China with 50% tariffs earlier today unless China withdraws its 34% U.S. export tariffs.
The rapid flow of Tit-for-Tat tariffs makes it difficult for investors to know exactly which tariffs are being applied for, or when to increase the growing uneasy uneasiness on the impact of the growth trade war.
Electric vehicles are the fast-growing market for China Steel. (Photo taken by Str/AFP via Getty Images
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UDD's view is that China will be able to maintain nearly one billion tons of steel production per year, as the decline in demand in China's real estate sector is replaced by other industries such as machinery and electric vehicle production.
The focus of steel demand for the property sector is to mask the rapid growth in other industries, for example, steel production in steel production such as steel production increased from unit quantity to 30% per year, accounting for 30% of total steel demand, he said.
“So you already have a country running at a billion tonnes of steel production every year and it has been consistent over the past six years, and I can see the pathways that continue in the coming years,” Ud said.
“This is not based on any sector, but on more speeds in China’s resilience and adaptability as it rotates with new industries and opportunities. The Chinese market is more resilient than people have recognized.”
