BHP and RIO’s iron ore forecasts are “lazy” and most likely wrong

Clinton Dines, the man who ran BHP’s China operations for 21 years, has labelled BHP and Rio’s iron ore forecasts for China “lazy” and “convenient”. He says the prediction that demand will peak at $1B Tonnes “has taken on a life of its own. Anyone with any nous would query it as a very nice round, convenient number. How could you ever forecast that?” The AFR says McKinsey helped both firms arrive at that number and “The McKinsey research has been cited since by the RBA in discussion papers and used to frame the outlook for the federal budget.” The World Steel Association has been the latest to challenge the number, suggesting that China’s steel consumption has peaked and “will remain at about 800 million tonnes until the middle of the next decade, before declining.” (Sources: AFR and World Steel Association) (VIEW LINK) (Subscribers only)