Off the wire
• H7N9 patient discharged from Hubei hospital  • China treasury bond futures close lower Wednesday  • Teachers from developed regions to change education in 20 Tibetan schools  • Shandong rewards cities for improved air quality  • China Hushen 300 index futures close lower Wednesday  • Russia's unemployment rate increases in March  • Singapore to hold by-election for Bukit Batok on May 7  • Russia inspects motorized infantry in Eastern Military District  • Commentary: China using military plane to transport sick workers from South China Sea reef lawful, rational  • Urgent: Bus collision kills 13 in northwestern Bangladesh  
You are here: 　 Home

BHP cuts iron ore guidance as production slips

Xinhua, April 20, 2016 Adjust font size:

BHP Billiton has cut its annual production guidance by 10 million tonnes or 4 percent, citing problems encountered with adverse weather and rail maintenance.

The company announced on Wednesday it would pair back its production of iron ore from the Pilbara to 260 million tonnes from 270 million tonnes.

BHP Billiton chief executive Andrew Mackenzie said the company had taken a number of steps over the past 12 months to strengthen its position in the market including asset sales and the deferral of investment for long-term value.

"While these measures will reduce our output this year, they have increased our focus on our highest-quality operations and will support stronger margins and returns," Mackenzie said.

"Debottlenecking our assets at very low cost will generate high returns and substantial value."

IG market analyst Angus Nicholson told Xinhua the fact that two of the biggest producers of iron ore Rio Tinto and BHP Billiton are cutting their guidance for the year is certainly a positive for the iron ore supply and demand dynamic.

"It is very much helped along the way by the fact that we've seen a big pick up in Chinese fiscal stimulus, spending and investment in the first quarter and that has helped to rally the iron ore spot price in a big a way," Nicholson said.

"The fact that you're also seeing a lower guidance from two of the biggest iron ore producers as well I think that does help the iron ore price."

He noted their tactic of aggressively being the lowest cost producers and trying to blow out the higher cost producers through oversupplying the market has certainly started to put a strain on their finances.

"We have seen that in the dividend cuts and also their expenses."

Rio Tinto announced on Tuesday it would cut its production forecast of iron ore for 2017, citing delays to its autonomous long distance rail system.

Production is now expected to be between 330 and 340 million tonnes in 2017, down from 350 million tonnes.

"We continue to experience volatility in commodity prices across all markets," Rio Tinto chief executive Sam Walsh noted. Endit