A resources analyst says the slowdown of growth in China may affect Australia''s iron ore industry in the short term with more downward pressure on steel prices.BHP Billiton has announced it had doubled its annual net profit before tax to $14.4 billion, on the back of record iron ore sales last financial year.
However, CEO Marius Kloppers says he is cautious about the short term global economic outlook because of the slowdown in China''s growth.
Analyst Peter Strachan says there may be some downward pressure on steel prices over the next year.
"Most of the iron ore suppliers are now pricing their product rather than on 12 month contracts, they''re doing it on a rolling three month price so we may well see that as we move towards the end of this calendar year, prices for iron ore will weaken," he said.
"In the long term, iron ore will continue at a firm pace even though in the short term there may be some downward pressure on steel prices which would reflect in the spot prices for iron ore."
Mr Strachan also says BHP Billiton could afford a $43 billion takeover bid for the Canadian fertiliser company, Potashcorp but should not offer any more.
Mr Kloppers attemped to ease concern about the bid as shareholders worry it will make BHP''s earnings more volatile.Mr Strachan says the market is indicating the miner''s offer would not be enough to buy the business and Potash has rejected it.
He questions whether any moves to pay more than its current offer would be sensible.
"The issue is does it make sense for BHP to pay that much for Potash Corporation. If they pay more than $43 billion to buy it, it may actually be earnings dilutive for the company over a fairly long period," he said.