BHP Billiton, the world's largest miner, gave a cautiously optimistic outlook for commodities demand today after posting a 51 per cent dive in second-half profit, its first profit fall in seven years.
It said demand in China and India had returned earlier than many had expected, driven mainly by restocking, but it noted that the rebuilding of stocks in China was now largely over. It also left a question mark over signs of a pickup in developed markets.
“While demand in developed markets remains constrained, a brighter outlook has emerged recently from some of the developing markets,” the company said.
“After intensive de-stocking, there is emerging evidence of demand improving in North America, Europe and Japan,” it added.
But BHP Billiton said it was too early to say whether the improvement was driven just by restocking or a combination of restocking and real demand.
While the whole mining sector has suffered from the global economic slump, forcing companies to idle capacity and delay expansion projects, BHP Billiton is seen to be well-positioned with its strong balance sheet to take advantage of any upturn.
China is the key to any early recovery for Australian miners, as it is the number one buyer of iron ore, the biggest earner for BHP and its rival Rio Tinto this year.
Reuters