BHP Billiton Upbeat on Iron Ore, Coal -- Commodity Comment
February 20 2018 - 1:55AM
Dow Jones News
BHP Billiton Ltd., the world's largest listed miner by market
value, released its fiscal first-half results on Tuesday.
Underlying profit rose 25% to $4.05 billion, and said it will lift
its interim dividend by 38% to 55 cents a share.
Here are remarks from the company's report:
On its balance sheet:
"Higher commodity prices and a solid operating performance
delivered free cash flow of US$4.9 billion. We used this cash to
further reduce net debt and increase returns to shareholders
through higher dividends...Our capital-expenditure program remains
focused on high-return, low-risk development opportunities in
commodities where we see greatest potential. We remain firm in our
resolve to maximize cash flow, maintain discipline and increase
shareholder value and returns."
On China's outlook:
"Economic growth is expected to slow modestly" this year toward
the lower end of the 6.5-7.0% "official GDP target range...as
continued strength in infrastructure and resilience in external
trade is offset by a cooling of growth rates in the housing and
automobile markets."
On world growth:
Global GDP should match the 3.5-3.7% range seen last year in
2018 as "the U.S. economy should see a near-term boost to growth"
following the recent tax cuts. "In Europe and Japan, where the
limits of monetary-policy effectiveness may have been reached, any
upside on growth in the medium term will have to come from
external-demand sources. India's economy is on a healthy growth
trajectory, supported by positive reform sign posts."
On iron ore:
The overall price gains seen in the last half of 2017 came as
"demand for high-grade products remained firm on the back of high
steel margins" as Chinese production slowed. "This has resulted in
an elevated price differential between high- and low-grade-ore
price indexes. In the medium to longer term, ongoing Chinese
supply-side reforms, the shift of steel capacity to coastal regions
and more-stringent environmental policies are expected to underpin
demand for high-quality seaborne iron ore."
On copper:
Its prices also rose into 2018, helped by "continued strength in
China [demand], in particular from consumer durables. On the supply
side, the announcement that China would ban lower-grade copper
scrap imports and the potential for supply disruptions due to the
large number of upcoming labor negotiations in South America drove
sentiment. Over the next few years, the global copper market is
expected to remain finely balanced and vulnerable to supply shocks,
particularly in the concentrate segment."
On coal:
After 2H gains in metallurgical prices amid still-strong Chinese
demand and constrained domestic supplies, "high prices have
incentivized additional seaborne supply from the U.S. and
Mozambique. In the medium term, China's coal supply-side reforms
and environmental considerations will support demand for
higher-quality metallurgical coal."
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
February 20, 2018 01:40 ET (06:40 GMT)
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