BHP Billiton iron ore output is close to record level

According to BHP's operating statement for the first half of fiscal year 2022 (July 1-December 31, 2021), its copper production in the second half of last year was 742000 tons, down 12% from the same period last year; iron ore production was 129 million tons, up 1% from the same period last year; coking coal production was 17.7 million tons, down 8% from the same period last year; thermal coal production was 7.2 million tons, down 5% from the same period last year; nickel production was 39300 tons, up 15% from the same period last year.

Of this total, copper production in the fourth quarter of last year was 365500 tons, up 3 percent from the previous quarter; iron ore production was 66.1 million tons, down 4 percent from the previous quarter; coking coal production was 8.8 million tons, unchanged from the previous quarter; thermal coal production was 3 million tons, down 30 percent from the previous quarter; nickel production was 21500 tons, up 21 percent from the previous quarter.

Han Murui (Mike Henry), chief executive of BHP Billiton, said: "Iron ore production has reached almost record levels and reduced the impact of bad weather and O'Micron quarantine measures on operations."

Iron ore prices have rebounded since the end of November 2021. As of January 20, 2022, the iron ore index was 1060 yuan per tonne, up about 25 per cent from its November low in 2021, according to Nishimoto Shinkansen.

With regard to the overall decline in copper production in the second half of last year, BHP Billiton explained that production at the Olympic Dam had declined mainly due to planned maintenance of the smelter, which would be completed in January 2022. The reduced production was partly offset by an increase in (Antamina) production at Antamina Copper Mine.

The decline in coking coal and thermal coal production is mainly due to the weather. BHP Billiton said that most of the operation and planned maintenance of coking coal had been affected by the doubling of rainfall in the fourth quarter of 2021. The mining and stripping operations in thermal coal producing areas and the productivity of mining areas are also affected.

There was a high increase in nickel production in the second half of last year. BHP said this was due to planned maintenance of the entire supply chain in the third quarter of 2021.

For the entire fiscal year 2022, BHP Billiton's iron ore, thermal coal and nickel production targets remain unchanged, at 249 million-259 million tons of iron ore, 13 million-15 million tons of thermal coal and 85000-95000 tons of nickel, respectively.

At the same time, the copper production guidance for fiscal year 2022 was adjusted to the lower end of the 1.59 million-1.76 million tonne range, while the coking coal production target was reduced to 38 million-41 million tonnes from the previous 39 million-44 million tonnes.

Han Murui said that the guidance for adjusting coking coal mainly stems from the continued prediction of adverse factors caused by bad weather and O'Micron in the second half of 2022.

The total copper output for the whole year approached the lower edge of the guidance range, mainly due to the reduction of the production guidance target of the Pampa Norte copper mine.

Recently, under the background of the expected improvement of macro policy, the continuous recovery of hot metal production and the strong replenishment demand of steel mills, the center of gravity of iron ore futures prices continues to move upward. As of yesterday afternoon's close, the main iron ore contract 2205 closed up 1.3 per cent to 742 yuan per tonne, approaching last October high.

Judging from the recent positive factors in the iron ore market, Zhai Helpan, head of black industry research in Jianxin Futures, said that on the demand side, steel mills resumed production, blast furnace operating rate and capacity profit margin significantly rebounded to the level before the end of October last year, thus stimulating a rebound in iron ore demand; On the supply side, before and after the Spring Festival in previous years, there was a low season for the shipment of imported iron ore, and steel mills faced certain pressure on the supply of raw materials before the Spring Festival, which led to the superimposed demand for active replenishment of iron ore to further push up iron ore prices. In addition, from the perspective of domestic macro and industry policy trends, increasing infrastructure investment in 2022 will be an important option to stabilize the economy and make up for the lack of real estate investment demand, and the resulting increase in infrastructure investment demand will benefit construction steel and its raw materials, as well as iron ore producers. From the international macro trend, before the Fed raises interest rates in 2022, RMB assets, especially ferrous metals and crude oil with good fundamentals, will still be sought after by funds.