The company logo adorns the side of BHP’s global headquarters in Melbourne on February 21, 2023. – The Australian multinational, a leading producer of metallurgical coal, iron ore, nickel, copper and potash, said net profit fell 32 percent year-on-year to $6.46 billion in the six months to December 31. (Photo by William WEST / AFP) (Photo by WILLIAM WEST/AFP via Getty Images)
William West | Afp |
BHP CEO Mike Henry said he expects China’s real estate sector to recover next year due to favorable government policies.
While Henry acknowledges that the country’s real estate sector is a “weak spot” for steel demand, he is optimistic about the measures recently announced by the Chinese government.
“The government recently introduced measures to support the real estate sector. … We expect that there could be a turnaround in the real estate sector in the coming year,” Henry said.
In recent months, China has taken a series of measures to stabilize the country’s real estate sector, which once reportedly accounted for about 25 to 30 percent of the country’s GDP. For example, Beijing has abolished the nationwide minimum interest rate on mortgages and reduced the minimum down payment rate for first-time buyers to 15 percent from the previous 20 percent.
In May, the central bank also announced that it would provide 300 billion yuan ($42.25 billion) to financial institutions to lend to local state-owned enterprises to purchase unsold and already completed housing.
On Saturday, China’s Housing Minister Ni Hong said there is still “great potential and room” for China’s real estate sector to expand as the country’s urbanization progresses and demand for good housing continues to rise.
BHP reported a two percent increase in its annual profit on Tuesday, attributing the growth to “solid operating performance and higher commodity prices for key commodities.”
Henry noted, however, that there is still “some volatility” in China’s steel demand, which is under pressure from the real estate sector.
However, the CEO stressed that there are other sectors in China that contribute to steel demand and are showing quite healthy growth, such as infrastructure, shipping and the automotive industry.
Australian shares of BHP were up 1.97% in trading on Tuesday.
