BHP Billiton Limited

Australia’s ASX200 lost marginally today. Although the index was trading higher until noon, it erased those gains afterward. 70 stocks gained, while 118 fell. BHP Group (BHP) outperformed the index with marginal gains, while Rio Tinto (RIO) gained 0.64%.

Bumper margins prompted Chinese steel mills to continue increasing their output.

As China consumes more than 70% of seaborne-traded iron ore, it’s imperative for iron ore investors to track the country’s demand and outlook.

Iron ore prices showed a lot of volatility in 2017, which is continuing well into 2018.

It’s vital for iron ore investors to track movements in the Chinese real estate market (TAO). This sector constitutes more than 50% of the total steel consumed in the country.

Freeport-McMoRan (FCX) reported its 4Q17 earnings on January 25, 2018. The company reported an adjusted net income of $750 million.

Of the 18 Wall Street analysts currently covering the BHP Billiton’s (BHP) stock, 61% rate it as a “buy,” 28% recommend a “hold,” and the remaining 11% have a “sell” recommendation on the stock.

Iron ore (PICK) volumes are key to BHP Billiton’s (BHP) revenues and earnings as iron ore is the single largest commodity produced by the company.

Cleveland-Cliffs (CLF) had accumulated debt over a number of years.

In this article, we’ll discuss analysts’ projections for Cleveland-Cliffs (CLF). Investors should note that drivers for CLF are quite different from those of its seaborne peers.

Iron ore prices have been very volatile lately. While the prices fell substantially in September 2017, they picked up after that.

China’s property sector is a steel-intensive market—consuming approximately 50% of overall steel in the country—followed by the automotive industry.

Copper, like other metals, is widely recycled. Last year, we saw improved scrap flows as copper prices moved to higher price levels.

The China Association of Automobile Manufacturers originally forecast 5.0% growth in total vehicle sales for 2017.

Due to the government’s efforts to fight pollution in winter months, steel prices in China have hit a nine-year high in the first week of December 2017.

Overall, China’s steel production in 2017 was strong, which was mostly supported by higher steel prices and firm demand.

Goldman Sachs (GS) believes that iron ore prices should sink back to $50 per ton in 2018.

Iron ore prices were tumultuous throughout 2017. There is a 44% difference between the peak of $95 per ton in February and the trough of $53 per ton experienced in July.

China’s property sector is one of the most steel-intensive sectors, consuming approximately 50% of overall steel in the country.

Vale’s CFO (chief financial officer) Luciano Siani Pires said during Vale Day on December 6, 2017, that the company deserves a rerating of its valuation.

Vale has changed its product portfolio and quality in iron ore according to market demand. In 2017, it’s more focused on selling high-quality ore.

Copper bulls had a nice run since July. Copper underperformed several industrial metals in 1H17. However, copper has been on an uptrend in 2H17.

The drivers for Cleveland-Cliffs’ (CLF) top and bottom lines are quite different from the miners we’ve discussed in the previous parts of this series such as Rio Tinto (RIO), BHP (BHP), and Vale (VALE).

The Chinese automobile industry comes second, after the real estate sector, in consuming the most steel. In this article, we’ll look at the recent developments in this industry to track the associated iron ore demand.

In the previous part of this series, we discussed how the momentum in Chinese steel production in 2017 has come on the back of strong steel prices.

Iron ore prices in 2017 so far have been a roller coaster ride. Prices reached a peak of $95 per ton in February only to slump to a low of $53 per ton in July and take off soon after.

It’s important for investors to keep tabs on iron ore port inventories in China. Inventory levels show the balance between demand and supply for iron ore.

China’s total vehicle sales rose 2.0% in October 2017 compared to October 2016.

Vale’s (VALE) Ferrous division accounted for ~87.6% of its adjusted EBITDA in 3Q17, compared with ~82.0% in 2Q17.

China’s property sector China’s property sector is one of its most steel-hungry sectors, accounting for close to 50% of overall steel demand. Therefore, it is important for steel investors to keep tabs on the sector to gauge the steel demand outlook in China. China’s property sector once again appeared to be under stress in August. […]

Cleveland-Cliffs now fully owns Tilden On October 2, 2017, Cleveland-Cliffs (CLF) announced its acquisition of U.S. Steel Corporation’s (X) 15% equity interest in the Tilden mine for $105 million. Cleveland-Cliffs already owned the other 85% of the joint venture. This transaction will provide 1.2 million tons of annual pellet production capacity to Cleveland-Cliffs, taking its capacity to ~20 million […]

China’s automobile industry is the second-largest steel consumer after the real estate sector.

China is the world’s largest consumer of iron ore. Therefore, to gauge the outlook for iron ore demand, it’s important to track China’s iron ore import data.

Wall Street analysts covering Cleveland-Cliffs estimate revenues of ~$2.4 billion in 2017. This implies growth of 14.7% year-over-year.

China imported 390,000 metric tons of unwrought copper and copper products in August 2017—compared to 350,000 metric tons in August 2016.

To gauge the steel demand outlook in China, it’s important to keep an eye on the property sector.

According to Reuters, the September 2017 steel rebar futures contract on the Shanghai Futures Exchange has risen 40% year-to-date.

China’s iron ore imports for July 2017 fell 2.4% over July 2016 to 86.3 million tons.

Goldman Sachs is bullish Although Goldman Sachs (GS) is bullish on the near-term price forecasts for iron ore, it believes that the pressure could return in the long run. In the near term, it believes that prices could be supported by the better-than-expected demand in China.  Goldman Sachs believes that the supply pressure could build […]

BHP Billiton’s (BHP) copper production fell 16.0% in fiscal 2017 to 1.3 million tons.

BHP Billiton (BHP) attributed the rise in iron ore prices to higher pig iron production in China, the preference for higher grade materials, and improved steel margins.

Vale’s (VALE) ferrous division accounted for ~82%.0% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in 2Q17.

After significantly outperforming its peers in 1Q17, Vale’s (VALE) performance deteriorated in 2Q17.

During its 2Q17 earnings call, Freeport-McMoRan (FCX) lowered its 2017 copper production guidance to 3.7 billion pounds.

Chinese steel production has been hitting one record after another. This renewed vigor in the Chinese steel industry is due to higher steel prices.

It’s important for investors to keep track of China’s iron ore import data because they provide a clue regarding the demand patterns for imported iron ore among Chinese mills and traders.

Rio Tinto (RIO) released its operational update for 1H17 on July 18, 2017. Rio’s iron ore shipments fell 6% year-over-year (or YoY) to 77.7 million tons in 2Q17.

Since China’s automobile industry is the second-largest consumer of steel after the real estate sector, it’s important to track its developments.

Chile’s economy is highly dependent on copper mining activities. The recent long strike at BHP Billiton’s Escondida copper mine continues to impact Chile.

One of the major factors that led to the iron ore price rally in 2016 and 1Q17 was stronger-than-expected Chinese steel prices.