* More low-cost iron ore supply to weigh on market
* Some Chinese lead economic indicators positive
* No problems in finding buyers in recent months
By Maytaal Angel and Eric Onstad
LONDON, Oct 14 (Reuters) - BHP Billiton BHP.AX , the
world's largest miner, was downbeat on Wednesday about iron ore
prices as low-cost producers continue to swamp the market and as
the intensity of China's demand for the steel making raw
material ebbs.
However, there were some positive signs on the economic
outlook for top commodity consumer China, BHP BLT.L officials
told a briefing during the LME Week industry gathering.
A global glut and falling Chinese steel demand have dragged
spot iron ore prices to less than $60 a tonne
from a high of nearly $200 in 2011. The price is forecast to
drop to $50 over the next two years, a Reuters poll showed.
"By the end of this year, there will be additional iron ore
coming from Australia, from Brazil," Arnoud Balhuizen, president
of the group's marketing unit, told a media briefing.
"Our expectation is that the iron ore market cost curve will
continue to flatten and continue to come under pressure."
In China, while some state-owned iron ore mines continue to
operate even though they are losing money, privately-owned mines
have largely been closing down when they go into the red, he
added.
"You'd be surprised how capitalism is making its way into
China. If you own a mine in China, it's a universal thing that
you don't like to lose money."
A substantial driver of the decline in commodity prices this
year has been the fear of a hard landing in China's economy, but
BHP sees glimmers of hope despite weak industrial production
data, said Stacie Wu, vice president of market analysis in the
marketing unit.
"In terms of the industrial side, which drives a lot of our
commodities in the near term, we look at other measures as well,
for example electricity generation, and some of those lead
indicators actually tell us there is activity happening," she
said.
"If you look at property sales and property prices, those
have been improving as well."
Balhuizen said there has been no issues with finding buyers
recently. In the most recent financial year, BHP's marketing
unit handled $45 billion of sales.
"All our commodities we have continued to see over the last
couple of months, commodities going, inventory levels not being
built up throughout the supply chain," he said.
"So while prices are lower, it hasn't stopped business, and
in some businesses we have seen increased flows."
Balhuizen also said he did not share the concerns of some
others that a surge of speculative activity was distorting
commodity prices.
In August, the chief executive of hard-hit commodity group
Glencore GLEN.L , Ivan Glasenberg, blamed short sellers and
hedge funds for a rout in his shares, saying they did not
understand his business and were painting "doomsday scenarios"
for commodities.
Speculative activity has been a big factor in financial
markets for over 25 years and can cause short-term volatility,
but was not a cause for concern, Balhuizen said.
"Some people who are complaining about it now have probably
been big players in it as well. So let's be realistic about it,"
he said.