Published On: Fri, Dec 2nd, 2016

BHP Billiton Ltd. (OTCMKTS:BHPLF) Intends To Use Free Cash For Debt Reduction

BHP Billiton Ltd. (OTCMKTS:BHPLF), the world’s leading miner, projects high prices of coking coal and iron ore to moderate even after China moves ahead with measures to reorganize its steel sector. Andrew Mackenzie, the CEO, said that prices have been soaring in recent months by short-term supply disruptions and restocking. Iron ore has surged 66% this year to regain from 3 straight yearly drops, while coking coal has jumped about 295%.

The highlights

China’s purpose to push through with rearrangement in its coal and steel sectors, and the country’s increasing inclination to favor imports compared to domestic material, has lifted prices together with other interim catalysts. The fact is that once some of factors go through, unless the market witness more supply disruptions, the fundamentals would indicate some of those existing figures will drift back. Natural gas and oil are better poised to offer gains into 2018.

Chinese stimulus in 2016 has boosted the infrastructure spending and housing sector, while recent information point to a growing economy in the top customer of energy, grains and metals. The outlook for the leading miners has improved since BHP in August posted a record full-year loss as raw materials declined in January to the lowest price since 1991.

Rising prices of coal to iron ore and copper this year have fueled anticipations for BHP’s profits. Underlying profit will jump over 280% to $4.6 billion in the coming one year to June 30 from a year ago, as per the average of 22 analysts’ projections taken by Bloomberg. Anticipations have improved from an average of $2.1 billion recorded in May.

Outgoing Chairman Jac Nasser reported that he considered that new U.S. President Donald Trump is likely to relax some policies advocated during the campaign. The entire globe would be left in trauma if tariff levels are modified across the board as per the level suggested, i.e., a potential step to tax Chinese imports at around 45%.

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