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BHP Billiton www.bhpbilliton.com

BHP Billiton (ASX: BHP) is a global leader in the resources industry, with a diversified portfolio of natural resources. The company's operations include: iron ore, coking and thermal coal, copper, zinc, oil & gas and diamonds.

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BHP Billiton bullish on coking coal

BHP Billiton (ASX: BHP) chief executive of ferrous metals and coal Marcus Randolph has said the mining giant is more bullish on the coking coal market than on iron ore.

Presenting at the 2011 World Steel Association conference in Paris on Thursday October 13, Randolph said supply tightness in the iron ore market would ease, with more projects due to come on stream, while the coking coal market will become even tighter.

"Watch coking coal markets, because there are not enough projects to actually supply what the market is going to require in the next decade," Randolph was quoted by SteelOrbis as saying.

He said that between now and 2020 there would be a lot more iron ore supply coming into the market than coking coal, and that demand for coking coal for use in steel would continue to outweigh production, particularly in China.

The Chinese supply and demand scenario is forecast to result in a 5% compounded annual growth rate (CAGR) for global sea-borne coking coal supply between 2010 and 2020, while global coking coal supply is forecast to rise by just 3%.

In his presentation, Randolph said the Bowen basin in northeast Australia, which accounts for about two-thirds of the world's sea-borne coking coal, is forecast to grow at a 6% CAGR between 2010 and 2020, while China will grow at 2% and Canada will grow at 12% during the same period.

Growth in the Bowen Basin has been hampered by bottlenecks at coal ports.

Meanwhile, global sea-borne iron ore demand is forecast to grow at a 5 per cent CAGR between 2010 and 2020, lower than the 8 per cent CAGR growth during the previous decade, but still above global iron ore supply CAGR of 4 per cent over the next decade.

Randolph said iron ore prices remained high at present because the industry couldn’t produce enough to support demand, but that they would fall at a slow rate as more supply came on stream, easing the supply tightness.

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