Iron ore price reverses to losses as weakening China steel consumption drags
Apparent consumption of five major steel products slipped by 2.1% week-on-week.
The world’s No.1 miner will continue boosting its iron ore output, adding to a global glut and keeping pressure on prices.
World’s No.1 miner BHP Billiton (ASX, NYSE:BHP) (LON:BLT) said Wednesday its iron-ore output surpassed all expectations for the 2015 financial year, and it forecast production will likely increase by 7% over the next 12 months.
The company, the world’s third largest exporter of iron ore, said it is on track with its expansion to 270 million tonnes of the steel making material in the current year, and up to 290 million in financial 2017.
In fact, BHP said iron ore is the only one of its four key pillars set to grow this year.
Production of copper, another key business for BHP, is expected to drop 12%this year, while metallurgical coal output will fall 6%, and petroleum 7%.
By contrast, rival Rio Tinto (LON:RIO) cut last week its total 2015 iron ore export forecast by 10m tonnes to 340m tonnes, while Brazil’s Vale (NYSE:VALE) said it would drop annual production of iron ore by 25m-30m tonnes.
The Melbourne-based company also announced it has taken an impairment of $350 million to $650 million, mainly on its copper assets, including its Cerro Colorado mine in Chile, and a reduction in the number of rigs being used within its onshore U.S. petroleum unit.
The write-down comes barely a week after BHP took a $2bn impairment against the value of its U.S. shale assets.
On top of that, BHP announced it expects to book an after-tax net loss of about $2.1 billion on the demerger of assets into South32 Ltd., which began trading in May. The company had earlier said the division would incur a one-off after-tax cost of $641 million, according to a March filing.
The company’s shares lost 2.05% in Sydney, closing Wednesday at A$26.27and were down 3.810% in London to 1,204 at 11:50AM GMT.
Comments
Gene Byrge
Whats the surprise? You’re mining. When things go well you make a few billion. When things go bad you lose a few billion. So whats the panic? The sky is not falling , just that the chickens have lost perspective in interpreting. Go watch T.V and wait. The pendulum will surely swing.