Commodity demand to fall in 2009 - Anglo

Ines Schumacher | Tue, 12 May 2009 14:29
[miningmx.com] -- ANGLO American expects demand for key commodities to weaken in the near term and its CEO Cynthia Carroll said timing of a recovery remained uncertain.

These comments from the head of one of the world's largest diversified mining companies came as China reported record copper and iron ore imports for April.

Carroll said Anglo was well-positioned after strengthening its balance sheet through the issuing of bonds, the sale of non-core assets and, controversially, passing on its dividend, which alone saved its $1.6bn. Anglo has no need for refinancing over the medium term, she said.

Anglo offered a subdued market outlook for commodities.

"Demand is likely to remain weak in the near term and timing for recovery remains uncertain," the presentation Carroll gave at the Merrill Lynch mining conference in Barcelona said.

Carroll said Anglo is building material positions in copper, seaborne iron ore and export coal.

However, Anglo forecast demand for these commodities would all drop this year compared to 2008, with copper down seven percent and iron ore eight percent. Hard coking coal and thermal coal demand was seen coming down 11% and two percent respectively.

The outlook for other minerals Anglo is involved in, namely nickel, zinc and platinum, is also negative. Demand is expected to come down eight, six and nine percent respectively.

Anglo is building material positions in copper, seaborne iron ore and export coal.

The presentation came on the day that China released some data on commodities, showing it imported a record amount of iron ore in April as well as being a net importer of steel.

Anglo iron ore unit, the JSE-listed Kumba Iron Ore, has embarked on a strategy of shifting iron ore it cannot sell to Europe and Japan to Chinese buyers.

China imported nine percent more iron ore than the previous month, bringing in 57 million tonnes.

One senior industry source at a state-owned Chinese steel mill told Reuters the figures were surprising and that the oversupply situation in the country as likely to worsen in May and June.

Steel product imports, at 1.62 million tonnes, exceeded exports of 1.41 million tonnes, which were the lowest since October 2004, the newswire said.

Chinese imports of unwrought copper and semi-finished copper products hit a new, but anticipated, high in April, rising 6.6% to 399,833 tonnes from the last all-time record in March.

"The imports were very high," said Stephen Briggs, analyst at RBS Global Banking & Markets is quoted by Reuters as saying. "The market generally thinks it is hard to explain how China can absorb that much copper."

"The market is already assuming that (Chinese) imports will be winding down now because imports were so high, scrap is more readily available."