Posted on 03 Nov 2022
Global miner BHP expects the lag effect of inflationary pressures to remain a persistent challenge through the 2023 financial year, Kallanish notes.
BHP procurement officer James Agar, speaking at the International Mining and Resources Conference (IMARC), said that the mining industry has been experiencing a combination of “good”, or demand–led inflation, and bad, supply bottleneck inflation.
He notes the balance between the two has been skewed heavily towards the “bad” since the Russian invasion of Ukraine.
According to him, labour markets are tight globally with no sign of easing soon, while the energy crisis in Europe is profound and will continue to drive volatility in energy markets.
"Globally, the near-term macro outlook remains very uncertain and fragile. It seems that Europe and the United Kingodm are almost certainly going to experience recession, and headwinds elsewhere are strong," he says.
"We expect the US economy to slow down; and it’s that economy that tends to drive overall sentiment towards investment in assets," he adds.
He, however, opines that China will be a source of stability for commodity demand over the next 12 months, as stimulus policies progressively take effect.
"While stimulus has produced growth in infrastructure and autos, we expect improvement in the housing sector to take a bit longer. The zero-Covid policy remains an overhang that creates additional uncertainty," he says.
Source:Kallanish
