China’s B&R Initiative to boost steel demand by 150 million tonnes - BHP Billiton
ECNS reported that according to mining giant BHP Billiton, the Belt and Road Initiative will see China's steel output maintain its current high levels, with production set to peak by the middle of next decade. BHP estimates that various projects being implemented under the flag of the Belt and Road will push incremental steel demand up by 150 million tonnes over the next decade. In the 68 Belt and Road countries and regions, this would represent growth in local demand of three to four percent per year, double the rate seen since 2011.
BHP's report, compiled by analyzing 2,000 projects linked to the initiative and focusing on what it identifies as 400 core projects, states that Chinese mills are in prime position to supply the steel required along the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
BHP's report finds that of the 68 countries and regions that make up the Belt and Road countries, only 10 are net exporters of steel, and 20 don't have any steel smelting capacity at all. This puts China, which is still looking to cut overcapacity in its steel sector as part of ongoing supply-side reform, in pole position to provide steel for projects that BHP estimates will cost USD 1.3 trillion.
BHP's report suggests that of the 150 million tonnes of extra steel required by the Belt and Road, 80% would be used in structures and reinforced concrete, with 20% going into machinery and other equipment."
BHP's research finds that 70% of Belt and Road projects are focused on developing infrastructure like power, railways, pipelines and other transport projects.
BHP suggests that the Belt and Road Initiative will be a catalyst for a virtuous cycle of economic development rather than providing funding for everybody's infrastructure needs, citing the Asian Development Bank's estimate that Asia needs USD 26 trillion in infrastructure investment by 2030, implying USD 1.7 trillion in spending per year."
BHP estimates that China will ultimately double its accumulated stock of steel in use, which is currently about 6 tonnes per capita.
However, if China is going to be the main source of steel for Belt and Road projects, it remains unclear how the continued demand for its output will play out alongside the government's pledge to tackle air pollution.
Source : ECNS