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BHP Billiton Limited (BHP)

  • Wed, Jul. 15, 12:44 PM
    • BHP Billiton's (BHP -1.3%) expected US$2B after-tax writedown of its U.S. onshore petroleum business, as development of a major gas field in Texas proves more complex and costly than anticipated, means the company will have written down its oil and gas business by more than $4B since 2011.
    • CEO Andrew Mackenzie has designated oil and gas as one of the “four pillars” of BHP’s business, alongside iron ore, copper and coal, but the latest writedown - which comes as prices for three other three commodities trade near six-year lows amid a global supply glut - "poses the question of whether or not those four pillars are the right ones,” says IG Ltd. strategist Evan Lucas.
    • Some are asking why BHP is not writing off more, with the company yet to take any big price-related writedown on U.S. shale; "given the deteriorating conditions of the U.S. oil and gas market, we thought an impending impairment could have been ­larger,” J.P. Morgan's Lyndon Fagan says.
    • The news could have been worse: Alongside the writedown, BHP raised its longer-term Permian production guidance to 150K boe/day from 100K boe/day, it confirmed FY 2016 capex guidance of US$1.5B, and said it expects to be free cash flow positive in the U.S. onshore business at US$60/bbl WTI and US$3/MMbtu gas.
    | Wed, Jul. 15, 12:44 PM | 2 Comments
  • Wed, Jul. 15, 3:36 AM
    • BHP Billiton (NYSE:BHP) is once again feeling the sting from its investments in U.S. shale gas and oil, the latest in a series of hiccups since it boosted its exposure to energy assets in 2011.
    • BHP said today it would take a $2.8B writedown (most of it on the Hawkville field in Texas), bringing its pretax charges on its U.S. shale unit to about $5.9B over the past three years.
    | Wed, Jul. 15, 3:36 AM | 1 Comment
  • Tue, Jul. 14, 10:31 AM
    • Vale (VALE -3.5%) gives back part of yesterday's big gains sparked by news that it would withdraw 25M metric tons of annual production starting this month.
    • Vale’s "cut" was not really a cut, as it is merely adjusting its operations to shift production from higher-cost tons to more profitable output; it maintained its 2015 production guidance at 340M tons as well as its longer-term target of producing 450M tons by 2018.
    • Morgan Stanley says Vale's move will not reduce supply and will not lead to higher iron ore prices in the short term, and could even have the opposite effect.
    • Citigroup says any move would need to result in reduced supply to have a prolonged influence on physical markets and prices, adding that BHP Billiton (BHP -1%) and Rio Tinto (RIO -0.8%) are unlikely to follow Vale’s move.
    | Tue, Jul. 14, 10:31 AM | 1 Comment
  • Mon, Jul. 13, 2:15 PM
    • Vale (VALE +6.9%) and other iron ore peers are rallying after reports that Vale plans to cut iron ore production in an attempt to boost profit.
    • Peter Poppinga, Vale's executive director for ferrous and strategy, told an industry conference in Sao Paulo today the company would lower iron ore output by 25M metric tons starting this month, with the cuts coming from lower quality products at its mines in south and southeast Brazil and from third-party purchases.
    • “Our mantra is not volume at any cost anymore, it’s to maximize margins,” Poppinga said. “It doesn’t mean shutting mines, it means optimizing some production flows at plants.”
    • Poppinga also said prices for iron ore, which have been cut almost in half in the past year, are poised to rebound as China shuts mines and replenishes inventories.
    • Also: RIO +3.9%, BHP +2.9%, SID +8.4%, CLF +7.2%, X +4.7%, AKS +7.4%, MT +2.4%, NUE +2%, STLD +2.3%.
    | Mon, Jul. 13, 2:15 PM | 24 Comments
  • Fri, Jul. 10, 6:30 PM
    • Iron ore's near 10% rebound overnight from a historic low $44.10/metric ton hit in the previous session leaves strategists debating whether more pain is ahead.
    • Major banks such as Citigroup have stated their bearish views, predicting prices to fall below $40/ton this year due to the commodity's fundamental oversupply, while HSBC expects prices to trade ~$45 during Q3.
    • A few analysts, such as Ayers Alliance's Jonathan Barratt, are optimistic, as the big bounce "suggests people will think iron ore is now relatively cheap. A market that breaks to new lows and stays low is very weak, but to see such a bounce suggests there's more comfort."
    • Barratt also believes iron ore's fortunes lie with Chinese equity markets, not supply fundamentals, saying "all the inputs the People's Bank of China is putting in will support the equity market and it will support the iron ore price."
    • Citi analysts today upgraded BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) to Buy from Neutral after recent stock price declines, as dividends yields of more than 6% for both stocks are very attractive in a low-yield world.
    • Goldman Sachs disagrees, saying that while dividend yields offer strong valuation support at current levels, the risk/return for the Australian miners is still more skewed to the downside.
    | Fri, Jul. 10, 6:30 PM | 5 Comments
  • Wed, Jul. 8, 6:17 PM
    • BHP Billiton (NYSE:BHP), Teck Resources (NYSE:TCK), HudBay Minerals (NYSE:HBM) and China Molybdenum reportedly are among the companies that submitted final bids for Barrick Gold’s (NYSE:ABX) Zaldivar copper mine in Chile.
    • A final decision on the mine, valued at more than $2B, is expected by the first week of August, Bloomberg reports, which adds that some of the bidders are interested in the whole asset even though ABX is seeking a buyer for only 50%.
    • Zaldivar produced 222M lbs. of copper in 2014, and contained proven and probable copper reserves of 5.56B lbs. at year-end 2014.
    | Wed, Jul. 8, 6:17 PM | 7 Comments
  • Wed, Jul. 8, 8:42 AM
    • Iron ore prices plunge to their lowest levels in at least six years, sparked by fears that the rout in China’s stock market could hurt demand while the biggest producers continue to raise output.
    • Ore delivered to Qingdao sank 10% to $44.59/metric ton overnight, the lowest price dating back to May 2009.
    • Iron ore’s 10-day drop started with figures that showed holdings at ports in China rebounded last week while exports from Australia’s Port Hedland climbed to an all-time high., and the slump deepened as China’s stock rout worsened.
    • BHP -3%, RIO -4.2%, VALE -3.2%, CLF -4.8% premarket.
    | Wed, Jul. 8, 8:42 AM | 8 Comments
  • Tue, Jul. 7, 10:23 AM
    • Freeport McMoRan (FCX -7.3%) is the S&P 500's worst performer in early trading as copper prices retreat to five-month lows.
    • Other global miners of copper, iron ore and other metals also are posting sharp losses: VALE -6.1%, BHP -3.8%, RIO -3.9%, SCCO -4.4%, TCK -6.4%.
    • China’s stock market swoon is magnifying investor fears about weaker demand from one of the world’s largest consumers of raw materials.
    • Overnight, the S&P, Goldman Sachs and the Bloomberg commodity indexes fell the most since November, and analysts say the worst is yet to come.
    • "China's demand stumble comes at an awkward time, just when more and more supply of raw materials is coming on stream in many sectors. No quick fix in sight," says HSBC co-head of Asian economic research Frederic Neumann.
    | Tue, Jul. 7, 10:23 AM | 10 Comments
  • Mon, Jul. 6, 12:39 PM
    • Australian miners urge China to suspend a coal-quality testing regime, which they say is unfairly blocking cargoes at Chinese ports and increasing costs for exporters at a time when the seaborne coal trade is under severe stress.
    • Australia's government has complained to China about the tests, which ban the burning of coal with ash content of more than 16% or sulfur content of more than 1% in populous eastern cities.
    • UBS analyst Daniel Morgan says the coal-quality tests are part of a wider shift towards protectionist measures in China, which also has recently introduced import tariffs.
    • Coal is Australia’s second-biggest export, worth ~A$37B in 2014-15; other big coal exporters including Indonesia, South Africa and Canada also are being affected by the Chinese testing regime, which was introduced in January.
    • In today's trade: BHP -4.3%, RIO -1.5%, OTCPK:FSUMF -10.8%.
    | Mon, Jul. 6, 12:39 PM | 3 Comments
  • Thu, Jul. 2, 3:49 PM
    • Iron ore prices fell more than 5%, suffering the largest one-day percentage loss since March and falling ~15% since hitting a multi-month high of $65.61/metric ton on June 11.
    • Analysts believe a prolonged wet season in the Pilbara region of Western Australia affected output, in particular at mines owned by Rio Tinto (RIO +0.6%), the world’s no. 2 producer of iron ore.
    • Traders also noted shipments from Australia and Brazil, another major supplier, have started to increase as the weather improved, and a further decline in Shanghai Rebar futures.
    • ANZ says iron ore is likely to fetch $53/metric ton in coming months, while Goldman Sachs is even more bearish, believing iron ore will average $49 in Q3.
    • Also: BHP +2%, VALE +1.3%.
    | Thu, Jul. 2, 3:49 PM | 11 Comments
  • Wed, Jul. 1, 6:44 PM
    • It’s time to add to short positions in high-cost iron ore producers Cliffs Natural Resources (NYSE:CLF) and Fortescue Metals (OTCPK:FSUMF), Wolfe Research’s Gordon Johnson says.
    • Iron ore prices are "extremely likely" to go below $47, Johnson believes, noting that when prices touched $47 earlier this year, "no one flinched - no capacity was taken permanently offline, while virtually all planned capacity ramps moved forward."
    • With ~52M metric tons of oversupply in 2014, an estimated 107.7M metric tons of incremental supply expected from the big four iron ore producers - RIO, BHP, VALE and Fortescue - and the likelihood that Chinese crude steel production will fall for the first time this year since the 1980s, Johnson estimates that 52M metric tons of excess will grow to ~183M in 2015.
    | Wed, Jul. 1, 6:44 PM | 15 Comments
  • Tue, Jun. 30, 9:48 AM
    • Australia's government cuts its price forecast for iron ore in 2015 by 10% to US$54.40/metric ton, a steep drop from the US$60.40 predicted three months ago and $94 forecast in January; for 2016, expectations call for iron ore at US$52.10 from a previous outlook for US$56.80.
    • The government estimates the country's YTD earnings from exports of iron ore and other raw materials to China, Japan and elsewhere fell 11% to A$174B; three months ago, it predicted an 8% drop in exports to A$179B.
    • The downside guidance is based on a weak outlook for China's steel sector, as production is expected to contract this year and next, while China's residential construction would remain stagnant;
    • Outside analysts also blame over-estimates of China's appetite for imported ore by Rio Tinto (RIO -0.4%) and BHP Billiton (BHP -1.1%), as well as Brazil's Vale (VALE -2.1%), which continue to expand production.
    | Tue, Jun. 30, 9:48 AM | 12 Comments
  • Thu, Jun. 25, 8:42 AM
    • BHP Billiton (NYSE:BHP) says it will cut its workforce linked to the Olympic Dam copper, uranium and gold mine in South Australia state by ~140 jobs, the result of the downturn in commodity prices.
    • The job losses are in addition to 90 positions cut by BHP in February; prior to these changes, the Olympic Dam workforce totaled ~4K, including employees and contractors.
    • The state treasurer says economic difficulties in the resources sector are likely to get worse before they get better.
    | Thu, Jun. 25, 8:42 AM | Comment!
  • Tue, Jun. 23, 8:49 AM
    • Westmoreland Coal's (NASDAQ:WLB) board approves the purchase of the San Juan Mine in New Mexico from BHP Billiton (NYSE:BHP), and says it has entered into a new long-term coal supply agreement with Public Service of New Mexico (NYSE:PNM).
    • An agreement to finalize ownership and coal-supply agreements for the San Juan Generating Station was needed by July 1 so the state's Public Regulation Commission can votes on PNM’s controversial plan for how it will meet power supply demands in coming years.
    | Tue, Jun. 23, 8:49 AM | 1 Comment
  • Mon, Jun. 22, 12:26 PM
    • Australian bank ANZ tells its clients to short iron ore because it has “run too far, too fast” after prices hit ~$65/metric ton earlier this month on a combination of stronger seasonal demand and some supply disruptions, while stockpiles at Chinese ports have fallen 20% YTD to a seven month low of 82M metric tons.
    • ANZ expects the trend will soon reverse and recommends a short iron trade (via the Singapore Exchange first month iron ore swap) with an entry at $62/metric ton and a target of $53 over the next three months.
    • The forecast for renewed weakness in the iron ore price could weigh on the shares of Western Australian producers such as Rio Tinto (RIO +1.2%), BHP Billiton (BHP +0.7%) and Fortescue Metals (OTCPK:FSUMF).
    | Mon, Jun. 22, 12:26 PM | Comment!
  • Fri, Jun. 19, 3:53 PM
    • Rio Tinto (RIO -0.9%) iron ore boss Andrew Harding says a short-term oversupply of housing in China will keep a lid on demand for steel for several years, in comments that are bearish for iron ore prices in the short term.
    • "In 2015 to date, China's steel production has been much the same as last year. There is inventory in the housing sector that has to be run down, and that will lead to a few years of reduced consumption of new steel," Harding says.
    • The results have given credence to claims by China's Iron and Steel Association that Chinese steel production has peaked at the 823M metric tons produced in 2014, and will not reach 1B per year, as predicted by Rio and BHP Billiton (BHP -0.8%).
    • But Harding says Rio will not be deterred by the short-term outlook, and is focused on the more encouraging long-term demand outlook for steel and iron ore.
    | Fri, Jun. 19, 3:53 PM | Comment!
Company Description
BHP Billiton Ltd is a natural resources company. The Company is engaged in the producing commodities, including iron ore, metallurgical and energy coal, conventional and unconventional oil and gas, copper, aluminium, manganese, uranium, nickel and silver.