BHP Billiton PLC

Australia’s billionaire Gina Rinehart’s $10 billion Roy Hill iron ore project expects to start shipping iron ore to world markets starting in October 2015.

Major iron ore producers are further reducing costs to weather the current market downturn.

Of the analysts covering Cliffs, one analyst has a “buy” recommendation, eight have “hold” recommendations, and six have “sell” recommendations.

BHP Billiton is facing pressure in all the commodity businesses it’s involved in. At spot prices, free cash flow doesn’t cover the company’s dividends.

China’s iron ore imports contracted 14% month-over-month and 1% year-over-year (or YoY) in the month of August to 74.12 million tons.

Brent crude oil price is a leading indicator for nitrogenous fertilizer revenues. When the price of Brent oil rises, it’s generally followed by a rise in ammonia prices.

Among the analysts that track Vale SA (VALE), 16.0% have given the company a “buy” recommendation, and 16.0% have given it a “sell” recommendation.

Because 98% of mined iron ore goes into steelmaking, the demand for iron ore is related to China’s auto sector performance.

Cliffs Natural Resources (CLF) reported revenues of $476 million for 4Q15, a decline of 54% YoY. The revenues for 2015 also dropped 40% YoY to $2 billion.

China’s (MCHI) economic slowdown is the biggest challenge for global metal and mining companies, which is why iron ore investors should keep a close eye on the Chinese economy.

Lowering costs is vital in price environments wherein copper prices are hitting multiyear lows, and copper volumes are key for copper segment revenues.

BHP announced an impairment charge of $4.9 billion post-tax on its US Onshore business. After this, the carrying value of the business will be ~$16 billion.

BHP’s petroleum production fell by 5% YoY (year-over-year) to 124.7 MMboe (million barrels of oil equivalent) in fiscal 1H16.

BHP Billiton’s coal business is the world’s largest supplier of seaborne metallurgical coal. Metallurgical coal is a key input in steel production.

Big iron ore companies maintain a strategy of increasing volumes in order to reduce the pressure on revenues, cash flows, and ultimately the bottom line.

BHP Billiton (BHP) (BBL) reported mixed production results for the second quarter of its fiscal 2016 on January 20, 2016. Its fiscal year ends on June 30.

The benchmark seaborne iron ore prices touched a low of $37 on December 11, 2015. This is below the breakeven for many small iron ore producers.

The pound-US dollar currency pair has been on a downtrend since the beginning of the year. It fell by 0.46% on January 16, 2016.

The British pound fell on January 5, 2016. It came close to an eight-month low against the US dollar even though the construction activity sector rebounded in December.

Rio Tinto’s (RIO) CEO Sam Walsh seems optimistic about China’s growth. He says China’s urbanization, government efforts, and infrastructure investment should continue to push it in the right direction.

BHP has a capital expenditure (or capex) guidance of $8.3 billion for fiscal 2016 and $7 billion for fiscal 2017.

For BHP Billiton, its petroleum division remains one of the most challenging businesses to operate in the current commodity price environment.

Copper is one of the four key pillars for BHP Billiton. It contributes to 23% of group production and 24% of underlying earnings before interest and tax.

Anglo American embarked on operational discipline improvements starting in 2013. It will focus on achieving $2.1 billion in improvements in 2016 and 2017.

Anglo American has reduced its production guidance for 2016 from 24–26 million tons to 18–21 million tons.

Anglo American has announced a transformation in its assets. Its focus will now be on “Priority 1” assets, which can deliver cash flow through the cycle.

At Vale Day on December 1, 2015, Vale lowered its iron ore production guidance due to a weak demand outlook and the fallout from the November 5 Samarco accident in Brazil in which two dams collapsed.

The output from Samarco contributes ~2% of the global seaborne iron ore market. The impact of the production loss from this operation should not be enough to move the needle up on iron ore prices.

The weak demand from China is hurting iron ore prices. The supply side, on the other hand, remains quite strong.

Cliffs Natural Resources (CLF) reported revenues of $593 million for 3Q15, a decline of 39% YoY. A decline in revenues impacted the company’s EBITDA negatively.

Rio Tinto (RIO) reported a solid set of production numbers for the third quarter of 2015 on October 15.

As there is still more low-cost supply ready to come online, the biggest such project being Vale’s low-cost S11D, there is a risk of some big iron ore miner becoming a marginal producer going forward.

When Vale’s S11D project comes online, it could be a further game changer in the iron ore market. Its cash costs per ton are pegged at close to $11 per ton.

Iron ore prices fell 49% in 2014, which was reflected in the share price performance of major miners. In this series, we’ll discuss the position of various iron ore players on the cost curve relative to iron ore prices.

Alcoa (AA) has a market cap of $14.42 billion. Its YTD (year-to-date) price movement is falling day by day. Alcoa’s income has fallen every quarter.

By tracking credit growth in China (MCHI), investors can gauge patterns that forecast future demand.

Iron ore shipments through Port Hedland reached an all-time high of 39.2 million tons in August as compared to 35.3 million tons in July.