This excerpt taken from the BHP 20-F filed Sep 26, 2007.
The influence of China may negatively impact our results in the event of a slowdown in consumption
The Chinese market has become a significant source of global demand for commodities. China now represents in excess of 45 per cent of global seaborne iron ore demand, 22 per cent of copper, 25 per cent of aluminium and 17 per cent of nickel demand. Chinas demand for these commodities has more than doubled in the last five years.
Whilst this increase represents a significant business opportunity, our exposure to Chinas economic fortunes and economic policies has increased. Sales into China generated US$9.3 billion, or 19.6 per cent of revenue including our share of jointly controlled entities revenue in the year ended 30 June 2007.
In recent times, we have seen a synchronised global recovery, resulting in upward movement in commodity prices driven partly by Chinas demand. This synchronised demand has introduced increased volatility in the Groups commodity portfolio. Whilst this synchronised demand has, in recent periods, resulted in higher prices for the commodities we produce, a slowing in Chinas economic growth could result in lower prices for our products and therefore reduce our revenues.
In response to its increased demand for commodities, China is increasingly seeking self-sufficiency in key commodities, including investments in additional developments in other countries. These investments may impact future demand and supply balances and prices.