China's steel demand is expected to double by 2020 as its urbanisation and industrialisation continues
China's steel demand is expected to double by 2020 as its urbanisation and industrialisation continues, Rio Tinto Iron Ore chief executive Sam Walsh says.
The Asian superpower's steel demand would remain strong despite the risks of a property bubble and low or no economic stimulus measures, Mr Walsh told a conference in Perth on Tuesday.
"We will go through blips along the way, but when you look at the fundamentals of urbanisation and industrialisation that is happening in China, we feel confident we'll see that growth," he said.
"We have in the past underestimated China."
BHP Billiton Iron Ore president Ian Ashby, who will head BHP Billiton's proposed joint venture with Rio Tinto in Western Australia's Pilbara region, also said demand would remain strong.
"China will not reach its inflection point in steel intensity for at least another 20 years," Mr Ashby told the conference.
Mr Walsh told delegates that Rio Tinto had wisely chosen its joint venture partner for its Simandou project in Guinea, Chinalco.
The Chinese giant would assist the partnership to access lower cost infrastructure, he said.
While Simandou iron ore was very high grade, the joint venture was challenged by "very extensive distances with basically no infrastructure or port that could handle large scale production".
Both Mr Walsh and Mr Ashby reiterated theirs calls for a quarterly index-based iron ore pricing system.
"There is a disparity between the benchmark (pricing system) and the spot market," Mr Walsh said.
"The benchmark system has to evolve."
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