BHP Billiton and Glencore, two of the world’s biggest natural resources companies, noted a darkening economic outlook last week but were generally bullish about demand for commodities.
Glencore, the world’s premier commodities trader, said during the first half of 2011, underlying demand conditions for commodities remained “generally robust, despite a number of major disruptive events”.
While BHP, the world’s biggest mining company by market capitalisation, said it expected “robust demand in the short and medium term [for commodities], supported by commodities’ intensive emerging economic growth”.
But later Marius Kloppers, chief executive, said the statement might have been “overwritten”, noting that no one knows the short-term outlook for commodities. Mr Kloppers said commodities prices were likely to be supported by a strained mine-supply base over the coming years, as financing becomes more difficult in today’s tense markets.
Ivan Glasenberg, Glencore’s chief executive, noted that falling markets opened up acquisition opportunities. “The short-term volatility caused by renewed bearishness on sovereign debt in developed markets is of course a concern to us,” he wrote in a statement, but added that Glencore would remain “alert to the potential opportunities that such an environment uncovers in our end markets”. However, both companies noted serious uncertainties about growth in developed economies, with BHP stating: “Global imbalances and high levels of sovereign debt continue to create uncertainty, and a protracted recovery remains our base-case assumption for the developed world.”