BHP banks on China export resilience and India growth for demand

China’s export resilience and policy support, together with strong growth in India, will underpin future commodity demand despite an uncertain global outlook, according to BHP Group.

The world’s biggest miner said that although China’s economic growth could slow in the coming quarters from a high base, the country’s exports will remain solid, according to its annual economic and commodity outlook published on Tuesday (Aug 19).

“The cost competitiveness of Chinese goods that accumulated in recent years, particularly while other countries faced significant inflation, means China’s exports will likely remain relatively resilient,” Graham Slack, BHP’s chief economist, said in the report.

This outlook is a positive signal for the world’s biggest steel market, which has stuttered as the Chinese economy matures and the nation struggles to shake off a years-long property slump. China’s steel exports have remained resilient, pumping out 9.8 million tonnes in July, up from the previous month, despite some predictions that it would fall and weaker nationwide output.

BHP’s full-year underlying profit fell by over a quarter as key earners iron ore and coking coal came under pressure. Still, the company, which sells a significant proportion of its exports to China, sees recent infrastructure announcements, including a major dam project in Tibet, as underscoring Beijing’s policy flexibility and willingness to invest, Slack’s report said.

BHP also noted that additional supply from Guinea’s giant Simandou project, expected to deliver high-grade iron ore fines, may not compete for supply with BHP’s Western Australian Pilbara mid-grade assets, and the potential worsening oversupply issue could be softened by grade depletion in traditional hubs.

Meanwhile, infrastructure spending and manufacturing expansion in India are expected to drive a sharp rise in metals demand, Slack said. The nation, which has exported an average of 30 million tonnes of iron ore annually over the past nine years, is likely to become an “opportunistic importer”, particularly during periods of domestic supply disruption, he added.

For copper, BHP expects Chinese demand in 2026 to remain strong, although it may slow slightly from highs as tariffs make impacts. The disruptions to mine supply globally could also offer support, the report said.

Copper slipped 0.4 per cent to settle at US$9,692 a tonne on the London Metal Exchange, while aluminium dropped 1 per cent and tin was up 0.4 per cent. BLOOMBERG