MINING giant BHP Billiton (BHP) said it expects a slightly softer and more volatile iron ore market in 2018 given construction is likely to slow down this year worldwide.

“Given the strong performance in 2017, we expect some slowdown in activities into 2018, with construction still set to grow but at a slower pace, machinery a little bit slower than last year and infrastructure will continue to be strong,” said Arnoud Balhuizen, chief commercial officer of BHP.

“So if you put all that together, you’ll probably see a market which is slightly softer in 2018 than 2017,” said Balhuizen.

However, he believed China’s move to trim overcapacity in its steel industry would in turn benefit his group and others like it, instead of hurting their business interests.

“The focus on high-quality products under the circumstances might give a chance to companies like BHP,” he said.

China is targeting the massive overcapacity in its iron and steel sector and has vowed to continue with its overcapacity reduction this year. While some commentators and analysts have suggested the initiative could drag on iron demand in the world’s second-biggest economy, Balhuizen said he was not concerned.

“We have seen the change in the viewpoint of the Chinese leadership around the speed of economic growth toward quality and sustainability, that of course has had a major impact on the steel industry in the last year,” he said.

“The strategy will be supported by those mining companies, of which BHP is one, with the highest quality, most stability, nearby resources and a very short transportation period.”

The trends toward sustainability, lower emissions and higher productivity are necessitating high quality resources, and BHP is a company with lots of high-quality resources. “So it’s a natural partnership we have with our Chinese customers,” Balhuizen said. He added relationships between the company and its customers will remain a key focus area for the upcoming year.

BHP and the Institute of Market Economy of the State Council’s Development Research Center signed a two-year agreement in January.

The pact aims to support comprehensive research into the next phase of China’s urbanization under a new round of technological revolution. (China Daily)