BHP has revealed its future economic and commodity outlook, viewing an ‘emerging Asia’ as the key destination for its vast portfolio of materials.
Off the back of recent commodity price and financial market volatility, BHP has indicated that it faces downside risks, and anticipates lower prices for steel-making raw materials in financial year 2020 than in the year just concluded.
BHP’s vice president market analysis and economics Huw McKay highlighted the company’s outlook regarding the susceptibility oil and copper prices have on swings in global policy uncertainty.
Looking ahead to the medium-term, the company admitted it needed additional supply, both new and replacement, for the majority of sectors it operates in.
While this is expected to lead to more expensive supply, McKay indicated this had the potential to be met with in the “emerging Asia” market, which includes regions such as China, India and the Association of Southeast Asian Nations.
China’s belt and road initiative, which aims to develop infrastructure and ramp up of investment in foreign countries and organisations, was also cited as a reason for increased demand.
BHP has reiterated its long-term view that population growth and rising living standards will drive demand for energy, metals and fertilisers for the coming decades.
The electrification of transport and decarbonisation of stationary power is expected to lead to more ethical supply chains, which BHP expects will make earning and retaining community and investor trust all the more valuable.
While confidently stating BHP has the right assets in the right commodities, the company also admitted it would “remain resilient in the uncertain world (it) faces tomorrow.”