The company logo adorns the side of the BHP gobal 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 slumped 32 percent year-on-year to 6.46 billion US dollars in the six months to December 31. (Photo by William WEST / AFP) (Photo by WILLIAM WEST/AFP via Getty Images)
William West | Afp | Getty Images
BHP CEO Mike Henry said he expects China’s property sector to rebound in the upcoming year on the back of favorable government policies.
While acknowledging that the country’s property sector is a “weak point” for steel demand, Henry is optimistic about the suite of measures the Chinese government has announced recently.
“The government has enacted policies recently that are meant to support the property sector… We expect that we could see a turnaround in the property sector in the year ahead,” Henry said.
In recent months, China has rolled out a slew of measures aimed at stabilizing the country’s property sector, which once purportedly accounted for about 25% to 30% of the country’s GDP. For example, Beijing scrapped the nationwide minimum mortgage interest rate and reduced the minimum down payment ratio for first-time buyers to 15%, compared to 20% previously.
In May, the central bank also announced it would allocate 300 billion yuan ($42.25 billion) to financial institutions to lend to local state-owned enterprises for purchasing unsold apartments that have already been completed.
On Saturday, China’s minister of housing Ni Hong said that there is still “great potential and room” for China’s property sector to expand as the country continues to urbanize and demand for good housing continues to grow.
BHP reported a 2% climb in its annual underlying profits on Tuesday, attributing the growth to “solid operational performance and higher commodity prices in key commodities.”
Henry noted, however, there is still “a bit of volatility” with respect to China’s steel demand, which has been under pressure from the property sector.
But the CEO said there are still other sectors in China that contribute to steel demand that are growing quite healthily, such as infrastructure, shipping and automobiles.
Australian shares of BHP were 1.97% higher in Tuesday trading.