Wed, Aug. 26, 9:57 AM
- BHP Billiton (BHP +2.1%) is upgraded to Sector Perform from Underperform with a A$27 price target, up from A$25, at RBC, which says lower costs leave the world's largest miner well positioned to withstand weak commodity prices.
- RBC analyst Timothy Huff says BHP has shifted its focus from growth capex to paying dividends, which "is not only a strong commitment to cover the dividend, but also shows a new flexibility with which management now views growth capex.”
- Huff believes BHP is a “high single-digit free cash flow-yielding stock” that does not fully reflect the potential cost gains from capex, working cap and iron ore in the next two years.
Tue, Aug. 25, 7:40 AM
- BHP Billiton (NYSE:BHP) +7.4% premarket after reporting its weakest annual earnings since 2003 and cutting its long-term forecast for Chinese steel demand, but reiterating its pledge to fully maintains its dividend.
- BHP, the last of the big five global miners to report results, said its underlying attributable profit fell to $6.42B for the year to June, below analyst consensus of $7.73B and $13.26B a year earlier; net profit plunged 86%, with BHP taking $2.9B in post-tax charges, mainly on its U.S. shale and Nickel West businesses.
- BHP forecasts crude steel production in China to fall to 935M-985M metric tons in the mid 2020’s, after saying in May it expected China’s steel output to reach as much as 1.1B tons by the middle of the next decade, but it expects China’s broader economy to lift in the second half of this year, meeting its 7% growth target for 2015.
- The miner raises its full-year dividend to $1.24/share from $1.21, and reiterates its policy of maintaining or increasing its dividend, which costs at least $US6.5B/year; BHP has not cut its dividend since 1988, and did not rebase its dividend when it spun out South32 earlier this year.
- To help protect its dividend, BHP says it is cutting capital spending for the 2016 for the third time since February, to $8B.
Tue, Aug. 25, 4:18 AM
- Mining giant BHP Billiton (NYSE:BHP) posted its worst underlying profit in 10 years amid a commodities slide directly tied to Chinese market turbulence.
- Underlying profit for the full year of $6.4B was down 52% from the prior year and missed an expected $7.73B. Net profit was $1.91B.
- BHP is lowering its forecasts for peak steel demand from China, but said "Our margins at 50% remain unquestionably the best in the sector," and pointed to strong operating cash flow protecting the balance sheet.
- The company is boosting its dividend by 2.5%, to $1.24/share.
- "Our forecast for Chinese steel production is to peak in the mid 2020s at between 935 and 985 million tonnes per annum," said CEO Andrew MacKenzie.
- Shares are up 5.5% in a quite green London stock market. In U.S. trading, the company's ADRs are up 5.7% premarket. They're down 32% YTD.
Tue, Aug. 11, 11:35 AM
- Commodity metals are getting hammered by China's devaluation, with aluminum trading down nearly 2%, copper prices lower by 2.5% and nickel plunging more than 3.5%.
- Hardest hit of the mining stocks is Freeport McMoRan (FCX -14.1%), which has completely surrendered yesterday's 10.8% surge; shares now are down 72% over the past year and 57% YTD.
- Iron ore miners are sharply lower: BHP -5.5%, RIO -4.2%, VALE -7.8%, CLF -7.3%.
- Steel companies: X -9.7%, MT -5.1%, AKS -5.7%, NUE -2.9%, STLD -3.5%, CMC -4%.
- Also: AA -6%, CENX -4.9%, TCK -8.2%, SCCO -4.9%.
- ETFs: XLB, JJC, XME, SLX, PEO, VAW, COPX, DBB, UYM, CU, IYM, JJN, SMN, JJU, PICK, MATL, CPER, JJT, BOM, RJZ, FXZ, PYZ, BOS, FOIL, JJM, LD, BDD
Wed, Jul. 22, 10:22 AM
- Citigroup analysts say BHP Billiton's (BHP -3.4%) FY 2016 guidance for declines in production of oil, coking coal and copper were larger than expected, and the guidance for increased iron ore production was also below expectations.
- While declines were expected due to field decline in oil and lower grades in copper, "it highlights the capital intensive nature of mining and that even $9B of capex does not drive production growth every year," CIti says, as it forecasts copper equivalent production growth of 2% in FY 2017.
- "The beauty of diversification is that when one commodity is down, one of the others picks up the slack. That's not happening right now for BHP," says a mining analyst for Morgans Financial.
- Miners and related companies are hammered in early trading: CLF -13%, RIO -1.9%, VALE -2.5%, FCX -3.1%, OTCPK:AAUKY -3.9%, CAT -2.7%, JOY -1.2%.
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.
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%.
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.
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.
- ETFs: JJC, CPER, CUPM
Thu, Jun. 18, 2:39 PM
- Citigroup adjusts its iron ore price estimates, raising their Q2 and Q3 prices to a respective $58/ton and $48/ton from a previous $44 and $36, before slumping to below $40 by year-end; for coking coal prices, the firm now foresees $98/ton this year and $110 next year vs. respective earlier forecasts for $101 and $115.
- The consensus has been that iron ore prices will again come under pressure as low-cost supply ramps up in H2 2015 and as demand from China’s steel furnaces wanes.
- Diversified miners’ share prices have floundered despite the iron ore’s unexpected recent strength, and Citi sees more of the same, maintaining Neutral ratings for BHP Billiton (BHP +1.6%) and Rio Tinto (RIO +0.9%), as strong dividend yields offer support to the downside while upside is capped by the bearish iron ore outlook.
- Citi maintains its Sell recommendation for Fortescue Metals (OTCPK:FSUMF), as ~$40 iron ore drives losses in 2016 and beyond.
Wed, Jun. 10, 10:11 AM
- Vale (VALE +6%) shoots higher as CEO Murilo Ferreira predicts a pickup in Chinese demand for iron ore with supplies set to tighten in H2 2015.
- Chinese iron ore imports will rise with domestic production down by ~200M metric tons after prices tumbled 60% from a 2013 peak, the CEO says, adding that “several Chinese producers - a higher number than people realize - have already left the business."
- Ferreira expects the global seaborne market for the key ingredient in steel production to grow 3.6% to 1.44B tons this year, adding that production elsewhere also is receding due to higher output costs.
- Also: BHP +3.5%, RIO +3.8%, SID +2.8%, CLF +4.7%.
Wed, Jun. 3, 7:45 AM
- BHP Billiton (NYSE:BHP) -2.3% premarket after CEO Andrew Mackenzie issued a warning that oversupply will keep global metals prices lower for much longer.
- "In many markets, recently installed low-cost supply can now be stretched to meet growing demand. Incremental supply, induced during periods of higher prices, will take longer to absorb and this means over-supply may persist for some time," the CEO said.
- Mackenzie continues to reject calls for limits on iron ore production in response to lower prices, saying "It is unproductive for Australia to cut or stall low-cost and profitable supply when the cycle drops. It destroys value, penalizes shareholders, customers and employees and disrupts the power of open markets."
- UBS recently estimated that the largest iron ore producers will see global supply expand to 215M tons by 2018 from 45M tons this year.
- On watch: RIO, VALE
Thu, May 21, 8:22 AM
- Australia's government says it will not seek to hold a special parliamentary inquiry into recent activity in the iron ore market, a quick turnaround after Prime Minister Abbott said last week that he backed an inquiry because it was needed to discover the facts behind the sharp drop in iron ore prices.
- A senator had been calling loudly for parliament’s economics committee to investigate claims that BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) are driving down prices by boosting supply to undermine smaller competitors; a probe was advocated by some smaller Australian producers such as Fortescue Metals (OTCPK:FSUMF) that are more vulnerable to lower prices because they lack to scale to keep down production costs.
- BHP CEO Andrew Mackenzie said in recent days that the uncertainty around an inquiry would damage investor confidence in Australia, and this view apparently won out.
- BHP +1.4%, RIO +1.8% premarket.
Mon, May 18, 9:15 AM
Mon, May 18, 3:39 AM
- BHP Billiton (NYSE:BHP) shares slump 4.6% in London after its South32 spin-off was valued at A$11.3B (US$9.1B), at the lower end of expectations, when it debuted on the Australian Securities Exchange today.
- BHP shareholders are receiving one share in South32 for each BHP stock they hold.
- South32, which is also listed in London and Johannesburg, fell 3.8% in Australia.
- The demerger leaves BHP to focus on its most profitable assets of iron ore, copper, petroleum, coal and potash.
Fri, Apr. 24, 12:29 PM
- Vale (VALE +9.1%) continues to surge, headed for its biggest weekly gain in 16 years and gaining nearly 50% since Wednesday's announcement that it produced record-high levels of iron ore, nickel and other commodities during Q1.
- Also on Wednesday, BHP Billiton (BHP +3.4%) said it was curbing expansion plans and supplies from higher-cost mines dropped, easing concerns over a global glut and sparking iron ore biggest one-day price jump since 2012.
- "Vale is reacting to the rebound in iron ore prices,” said an equity analyst at CM Capital in Sao Paulo. “Most of Vale’s costs are fixed, so whenever there’s an increase in prices, there’s a direct impact on earnings.”
- Iron ore prices jumped 5.5% overnight to $57.81/dry ton and have rallied 23% since bottoming out at $47.08 on April 2.
- Also: RIO +1.6%, CLF +3.7%.
BHP vs. ETF Alternatives
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.
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