(Reuters) – BHP Group (AX:) on Tuesday posted a 7% rise in fourth-quarter iron ore output, but warned that a rapidly spreading COVID-19 pandemic and lockdowns aimed to control it threatened short-term demand outlook.
Mining companies are banking on the recent uptick in industrial activity in China, the world’s top metals consumer, to support prices and insulate them from uncertainty over demand elsewhere, as global coronavirus cases continue to spike.
Although the company’s output for the quarter was higher, its production forecast of between 276 Mt and 286 Mt of iron ore for 2021 fell short of a UBS estimate of 287.5 Mt.
“The developed world has begun to re-emerge from wave one lockdowns, but early indications are that there is likely to be a period of uncertainty, with re-escalation of infection rates and re-implementation of COVID-19 response measures,” the miner said in a statement.
BHP said China’s domestic industrial activity had been improving but reitererated a major risk to maintaining that positive trajectory due to a possible emergence of a second wave of infections.
Last week, rival Rio Tinto (AX:) (L:) stuck to its 2020 iron ore shipment forecast and sounded markedly more upbeat, saying demand for the steelmaking ingredient was improving in China.
BHP, the world’s largest listed miner, said it produced 76 million tonnes (Mt) of iron ore in the three months ended June 30, up from 71 Mt a year earlier. That missed UBS’ view of 77.9 Mt.
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