Melbourne (Platts)--26Oct2012/616 am EDT/1016 GMT
The record high iron ore prices of the past ten years will not be repeated, BHP Billiton chief executive officer Marius Kloppers said at the company's annual general meeting in London Thursday. There had been a shortage of low-cost supply of iron ore and metallurgical coal over the past decade, which had contributed to unsustainably high commodity prices, but this supply shortage is now close to being filled, he said. "We are now witnessing a rebalancing of demand and low-cost supply, and a progressive recalibration of prices towards more sustainable levels," he said. Prices for commodities such as iron ore and coal are now expected to see "mean reversion" in the period ahead, he added. The higher prices were driven by China's insatiable demand for commodities and, while this had slowed in recent months, it "is directly in line with what was expected and what the Chinese government had indicated would occur", Kloppers said. Article continues below... Platts 2nd Annual SBB Steel Supply Chain Conference 2012 November 27-28, 2012, Hilton Antwerp, Antwerp, Belgium Platts Annual SBB Steel Supply Chain Conference will assemble Europe's leading steel supply chain professionals to assess the rationalization taking place and discuss how approaches, strategies and models are being reassessed in the current climate. The conference will also challenge existing market structures and showcase best practice examples which will enable the successful navigation through today's volatile demand and high transport cost environment. Reassessing the role and value of the steel supply chain in EuropeManaging volatile demandManaging transport cost and distribution risk mitigation strategies in the current climateImproving the quality, efficiency and productivity of the steel value chainEnhancing the service offer and reducing downstream supply chain cost
The record high iron ore prices of the past ten years will not be repeated, BHP Billiton chief executive officer Marius Kloppers said at the company's annual general meeting in London Thursday. There had been a shortage of low-cost supply of iron ore and metallurgical coal over the past decade, which had contributed to unsustainably high commodity prices, but this supply shortage is now close to being filled, he said. "We are now witnessing a rebalancing of demand and low-cost supply, and a progressive recalibration of prices towards more sustainable levels," he said. Prices for commodities such as iron ore and coal are now expected to see "mean reversion" in the period ahead, he added. The higher prices were driven by China's insatiable demand for commodities and, while this had slowed in recent months, it "is directly in line with what was expected and what the Chinese government had indicated would occur", Kloppers said.
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Platts Annual SBB Steel Supply Chain Conference will assemble Europe's leading steel supply chain professionals to assess the rationalization taking place and discuss how approaches, strategies and models are being reassessed in the current climate. The conference will also challenge existing market structures and showcase best practice examples which will enable the successful navigation through today's volatile demand and high transport cost environment.
"This industry's ability to meet incremental demand with low-cost supply has improved and, in this regard, the opportunities that lie ahead will be volumetric as opposed to price based," he said. Only low-cost producers are expected to thrive in these new operating conditions and Kloppers said the cost environment will also be heavily influenced by government policy and regulation. He warned that governments must play their part in ensuring that the elements of the cost environment they control provide a competitive framework for future investment to be encouraged, which extends to royalties, taxes, regulatory burdens and productivity-related policies. In the short term, BHP Billiton sees volatility remaining in financial markets as concerns about the stability of the eurozone and China's growth prospects continue to weigh on sentiment. However, the global miner still expects China's GDP growth to be in the range of 7-8% in the coming years, and it remains confident in the long term as China's industrialization and urbanization continues.--Marnie Hobson, marnie_hobson@platts.com--Edited by Wendy Wells, wendy_wells@platts.com
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