BHP Group (ASX:BHP) revealed that demand for commodities in the developed world has reduced substantially.

This is due to the impact of anti-inflationary policies.

The current outlook for the developed world remains uncertain in the near term.

Though the energy crisis has eased, the trailing effect of increased interest rates is predicted to curb economic growth in the developed world in FY24.

The external operating environment in FY23 for BHP was erratic.

The March quarter, however, saw a better-than-expected recovery in various sectors important to commodity demand, sparking hopes of a strong year overall.

BHP expects China and India to continue to be relative sources of stability for commodity demand in the near term.

Several copper-intensive sectors like automobiles, power machinery, consumer durables, and the electricity grid have witnessed solid growth.

However, BHP predicts that continued labour market tightness will continue to influence their cost base throughout FY24.

The company expects to sustain capital and exploration expenditure for FY24 and FY25 at US$10 billion annually, including US$0.4 billion of exploration in FY24.

The company also noted that near-term copper demand would be met by rising primary and scrap supply.

The cost of mining production is now estimated to have increased compared to pre-pandemic levels.

For future predictions, traditional copper demand remains solid while decarbonisation mega-trends are expected to bolster demand.

The Group highlighted how efforts are underway to extend the life of operations at its Cerro Colorado and Antamina sites.

Net debt saw an increment of US$10.8 billion in the same year.

For medium-term estimates, China’s iron ore demand is expected to shrink compared to current rates.

BHP Group is a multinational mining, metals, and petroleum company headquartered in Melbourne, Australia.