Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Conference Presentation (December 2004)
14 slides from Bhp's conference presentation, Dec 3, 2004
Slide 1: Factors Driving the Global Iron Ore Market
Factors Driving the Global Iron Ore Market Dr. Neil J. Bristow, Chief Analyst – Carbon Steel Materials Paris: 3rd December, 2004
Slide 2: Disclaimer
Disclaimer The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation ha
Slide 3: The Steel Industry has experienced sustained rapid growth
The Steel Industry has experienced sustained rapid growth Global steel growth has shown a major uplift since 2001, predominantly due to Chinese demand and production growth, outlook is for continued robust growth 1100 World crude steel production 1042 1050 300 Chinese crude steel production 265 250
Slide 4: Seaborne Iron Ore shipments have followed
Seaborne Iron Ore shipments have followed Global iron ore trade has grown faster than steel production at ~10%pa from 2001 and the outlook is forecast to continue to grow at rates over 7%pa 700 4 67 1 66 6 0 650 62 8 63 1 62 62 5 59 6 5 58 1 600 58 58 AME ABARE CVRD CRU 8 53 7 (million tonnes) 53 55
Slide 5: Chinese Iron Ore import growth major demand driver
Chinese Iron Ore import growth major demand driver Chinese iron ore imports have grown very strongly almost trebling in 5 years, China’s share of seaborne trade is expected to be well over 30% this year 300 60 China iron ore imports and share of global trade China iron ore imports by source 2003 55
Slide 6: Leading to the development of a Chinese spot market
Leading to the development of a Chinese spot market As a result of lack of available iron ore, a large spot market has developed with prices well above benchmark in most “liquid” iron ore market of China 70 Spot prices in Chinese market place 60 FOB nett (dmt) (US$/dmt) Largest gap Benchmark FOB net
Slide 7: Announced future capacity increases
Announced future capacity increases All major iron ore producers have expansion plans to meet strong demand growth, but will take 2-3 years to implement, thus market will remain tight in near term 750 Brazil Other Aust BHP Billiton SA Indian Other 600 450 (mtpa) 300 150 0 2003 2004 2005 2006 Source:
Slide 8: Major changes in freight indices from Q3 2003
Major changes in freight indices from Q3 2003 Very strong demand for bulk commodities, especially iron ore from China, resulted in strong rises in freight rates to uncharted levels for cape, panamax and handisize 9000 8000 BPI Index 7000 BCI Index BHMI Index 6000 5000 4000 3000 2000 1000 0 3/1/99 9/
Slide 9: Structural changes have occurred in the freight industry
Structural changes have occurred in the freight industry Due to record Chinese demand for iron ore, cape freight rates have also seen record levels and sharp sustained growth in differentials between Brazil, Australia to China $50.00 $45.00 $40.00 Tuburao/Beilun and Baoshan WA/Beilun and Baoshan $35
Slide 10: Freight differentials to Japan have also been affected
Freight differentials to Japan have also been affected The impact of high demand for capes from China has also pushed up differentials for Japan routes, with averages rises from ~$5/t to ~$18/t for JFY04 $45.00 $40.00 Tubarao/Japan WA/Japan $35.00 Differential Average annual differential $30.00 $25.
Slide 11: Having a significant impact on delivered price
Having a significant impact on delivered price Freight differentials seriously affects the landed cost relativities of distant and locally sourced iron ores making Brazilian ores markedly more expensive on a delivered basis 60 Freight FOB Price 50 (Landed Cost US$/t) 40 30 20 10 0 Australia Brazil A
Slide 12: Price curve CFR equivalent for Jan-Aug of CY2004
Price curve CFR equivalent for Jan-Aug of CY2004 Opportunistic Indian suppliers have taken full advantage of high Chinese spot price – potentially to the detriment of their contract, benchmark customers $US/DMTU 130.0 120.0 110.0 100.0 Weight average $US 83.32 Gap 90.0 80.0 70.0 Other Import 60.0 Ot
Slide 13: Summary and Concluding Remarks
Summary and Concluding Remarks There are three main factors influencing the seaborne iron ore market today: • Demand and supply is tight and likely to remain so in the near term • The shortage of ore has led to the growth of a spot market in China, the largest and most liquid iron ore market • Highe
Slide 14: Page 14
cy f | bhpbilliton e@ bhpbilliton
BHP Billiton — Conference Presentation (December 2004) on 6ix