BHP Group (BHP.AX) on Tuesday said it saw solid growth from some sectors in China as it logged its weakest annual profit since 2020, but added it was too early to assess the impact of Beijing’s policy measures on the country’s housing market.
In an earnings call to reporters, CEO Mike Henry said steel demand from Chinese sectors outside new housing starts, such as infrastructure, green infrastructure, automotive and property completions had been “pretty strong”.
The world’s biggest miner, though, was keeping a close eye on how Beijing’s policy steps to support housing starts translated into a real world impact, he said.
A recovery in the world’s second-largest economy has lost steam due to a worsening property slump, weak consumer spending and tumbling credit growth, adding to the case for authorities to release more policy stimulus.
While cutting its forecast for China’s growth to 5%-5.5% from 5.75%-6.25%, BHP still expects China to produce more than a billion metric tons of steel this year for the fifth year running, a relative bright spot in global markets. Western demand for commodities on the other hand has been seen hurt by the lagging impact of interest rate hikes.
“In the near term, while the outlook for the developed world is uncertain, we expect China and India to remain relative sources of stability for commodity demand,” BHP said.
Inflationary pressures would continue to impact its business in fiscal 2024, BHP warned, raising its spending estimates and estimating mining costs to be above pre-pandemic levels.