It is reported that BHP Billiton assertion that it will be able to maintain iron ore production despite a downturn in the demand for steelmaking materials has been challenged by Macquarie Equities.

Macquarie Equities which is serving as an adviser to Rio Tinto slashed its estimates of BHP's iron ore production volumes by 17% to 111 million tonnes.

Combined with cuts to the volume and price forecasts of coking coal, and other commodity price changes, Macquarie has reduced its BHP earnings forecasts by 31% in 2008 and 505 in 2009. It now expects BHP's nickel division to lose USD 535 million before interest and taxes in 2008.

Macquarie analysts led by Mr Brendan Harris said that adjusted earnings in the 12 months ending June 30th 2009 may be USD 16.51 billion. They cut their estimate for 2010 profit by 50% to USD 13.39 billion.

Mr Harris said that BHP may cut iron ore output from its mines in Western Australia's Pilbara region by 17% this year and coal output from Queensland may be curbed by 15%. BHBP has said that slowing Chinese demand for iron ore meant about 5% of customers had deferred deliveries.

Mr Harris said that "We see surpluses developing in many of the major metal markets in the very near term, which is likely to sustain a strong shift in pricing and producer behavior.''