BHP share price: September production update in focus
Though BHP’s CEO described the company’s latest update as ‘solid’, the company saw a number of declines across its key production areas, including iron ore.
BHP share price: the iron ore story
Though BHP (ASX: BHP) has diverse operations – spanning petroleum, copper and nickel – it is iron ore that remains its most important. Indeed, as we wrote previously heading into BHP’s FY19 results: 41% of the Group's 1H earnings (EBITDA) came from the company’s iron ore operations.
By the second-half of FY19 this figure blew out to 48%.
With such facts in mind, the mining giant today reported September Q19 iron ore production of 61 million tonnes, or 69 million tonnes on a 100% basis. This represents a 1% decrease on a quarter-over-quarter basis and a more sizable 3% decrease since the June 2019 quarter.
Speaking of these front-line figures, BHP commented that:
‘Volumes at Western Australia Iron Ore (WAIO) [came in] lower due to the significant planned maintenance at Port Hedland,’ while reiterating that ‘guidance for the 2020 financial year remains unchanged at between 242 and 253 Mt (273 and 286 Mt on a 100 per cent basis).
Speaking to the results from some of BHP’s other core products during the September quarter: petroleum production dropped 1%, copper production decreased 3% and nickel production fell a more significant 25%.
BHP CEO comments
Speaking of today’s quarterly update, BHP’s CEO Andrew Mackenzie maintained that:
‘We delivered a solid start to the 2020 financial year through ongoing strong operational performance across our portfolio.'
Speaking to the lag in Group production figures, Mr Mackenzie noted that:
'While Group production for the quarter decreased slightly due to the expected impacts of planned maintenance and natural field decline in Petroleum, guidance remains unchanged and we are on track to deliver slightly higher volumes than last financial year.'
It looks as if BHP investors potentially didn’t believe today’s market update to be quite-so-solid. By late afternoon, the BHP share price had been bid down some 3.02% to A$34.95 per share.
The potash equation
Besides standard production figures, the company also made the key announcement that:
'The Jansen Stage 1 potash project in Canada will be presented to the Board for final investment decision by February 2021. In order to make a final investment decision, work on engineering to support project planning and on finalising the port solution is required.'
BHP’s board has already approved $144m to fund these activities, mind you.
Ultimately, a stellar share price run spurred on by rising iron ore prices at the start of this year have mostly been undone by now. Iron ore prices have indeed settled down and currently hover around the $90 per tonne mark.
YTD the BHP share price has now risen just 3.77%, lagging the ASX 200 significantly.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets