Global mining giant, BHP has indicated a decrease in demand across all major base metals due to the impact of the COVID-19 pandemic.
While reporting its full-year results for FY 2020, ending June 30, the company noted that the global economy could face a 6pc decline toward the end of the calendar year. While the world remains uncertain about 2021, BHP expects all major economies to dip marginally, though the Chinese economy has already begun to trend up, owing to its fast recovery from the pandemic.
The threat of resurgent COVID-19 outbreaks in key countries for the base metals market poses the biggest risk to any growth or correction of prices as well as supply and demand, BHP noted in its outlook.
Global crude steel production, ex-China, is also expected to fall by 6pc while pig iron production could drop by 3-4pc in 2020, BHP estimates. The miner also expects long-term pig iron demand to fall due to an upswing in scrap recycling and the use of electric-arc furnaces (EAFs) this year.
BHP expects China’s iron ore demand to decline in H2 2020, compared with its current high. As for prices, the company believes that apart from Brazil and Australia, West Africa is a potential supplier who will drive prices if it delivers its proven volumes.
Copper prices fell in March-May but are gradually recovering due to a deficit in global supply. The global miner expects prices to rise further in the long-term due to declining global production capacity. BHP also indicated a rise in nickel demand, owing to its application in batteries for the growing electric vehicle (EV) market.
The company posted a profit of $7.9bn for FY20, a 4pc decrease compared to $8.3mn in the prior year. Its copper production rose by 2pc to 1.72mn mt in the year, but fell in the last quarter.