SYDNEY, Sept 25 BHP Billiton ,
the world's biggest mining company, on Wednesday said global
commodities markets were being undermined by rising supplies of
raw materials and warned the outlook for steel demand in Asia
was expected to moderate.
"We maintain a positive outlook over the long term as the
fundamentals of wealth creation, demographics and urbanisation
continue to create demand for commodities across Asia and other
markets," BHP Chairman Jac Nasser said in the company's fiscal
2013 annual report.
"Increased supply has, however, exerted downward pressure on
many commodity markets more recently and we expect this trend to
continue over the short term," Nasser said.
In the previous decade, BHP like most miners, splurged on
expansion projects in iron ore, coal, copper and other minerals
in order to capture ever-rising raw material demand from China.
Many of these projects, such as massive expansion in
Australian iron ore mining, are now meeting more tempered demand
BHP said growth rates for steel demand in Asia were expected
to moderate, as the Chinese economy gradually rebalanced.
Citi said in a note it sees iron ore prices
slipping to $115 a tonne from around $132 now due to
weaker-than-expected Chinese steel demand and more iron ore
supply coming through.
Combined iron ore output from Australia's top three miners -
BHP Billiton, Rio Tinto and Fortescue Metals Group
- is forecast to increase by a record 34 million tonnes
in the fourth quarter from a year earlier, and by 12 million
tonnes from July-September, according to the investment bank.
Nasser described fiscal 2013 as a "volatile and uncertain
year for global economies."
BHP's net profit fell by 30 percent in fiscal 2013 to $10.9
billion, though it lifted its full-year dividend by 4 percent to
$1.16 per share.
The lion's share of profits came from its iron ore,
petroleum and copper divisions, though each posted lower returns
versus the previous year.
BHP also said in the report it had reduced remuneration
packages for its chief executive officer and group management
members by around 25 percent from previous years, reflecting the
leaner times ahead.
"While lower rates of investment across the industry will
ultimately lead to more balanced markets, all resources
companies will need to improve productivity and be flexible
enough to adapt to change in this more challenging
environment," Nasser said.