China’s ambitious One Belt, One Road initiative will expand roads, railways and ports in various countries across the traditional Silk Road. The huge build out could also be a boon for the steel and materials sectors, along with related exchange traded funds.
According to BHP Billiton, President Xi Jinping’s plans to revive the ancient Silk Road could double the growth rate of steel demand in China as the country’s companies secure the lion’s share of overseas contracts for construction materials and equipment, reports Henry Sanderson for the Financial Times.
“This will drive demand for raw materials,” Arnoud Balhuizen, head of marketing at BHP, one of the world’s largest producers of steelmaking ingredient iron ore, told the Financial Times. “This extra steel demand will ultimately be met by China.”
BHP projects China’s steel demand will continue to ramp up before peaking in the middle of the 2020s.
“It will peak at some point towards the mid to the end of the next decade,” Balhuizen said. “We still think there’s growth in China’s steel production.”