Trade Tensions Weigh Heavily on BHP's Outlook -- Commodity Comment
21 Agosto 2018 - 06:56AM
Noticias Dow Jones
By David Hodari
BHP Billiton, one of the world's largest mining companies,
released its results for the financial year ending June 30 late
Monday. The company's report detailed a 33% rise in annual
underlying profit, although the miner signaled rising apprehension
on the short-term outlook for the commodities market as trade
tensions between the U.S. and China keep simmering. Here are some
other remarks from the report.
On the macroeconomic outlook:
"World economic growth strengthened to 3.8 percent in the 2017
calendar year, with a notable rebound in global trade. A similar
outcome is expected in the 2018 calendar year, although downside
risks have increased due to rising trade protectionism."
On China's economic outlook:
"We continue to expect China's economic growth to slow modestly
in the 2018 calendar year. The official GDP target of around
six-and-a-half percent is likely to be achieved, assuming the
current trends of slowing activity in the housing and automobile
markets, and resilience in infrastructure and machinery, continue.
We expect China's policymakers to continue to seek a balance
between the pursuit of reform and maintenance of macroeconomic and
financial stability. Over the longer term, China's economic growth
rate is expected to decelerate as the working-age population falls
and the capital stock matures."
On the U.S. economic outlook:
"Near-term prospects for the U.S. economy are sound, with
cyclical fundamentals solid. However, we expect the increase in
protectionism to weigh on consumer purchasing power and
international competitiveness."
On the oil market outlook:
"Crude oil prices trended higher during the 2018 financial year.
Larger than agreed production cuts by the 'Vienna Group' and strong
demand growth both contributed to a substantial reduction in the
inventory overhang. A roughly balanced market is forecast for the
2018 calendar year. The outlook remains positive, underpinned by
rising demand from the developing world and natural field
decline."
On the copper market outlook:
"Copper prices rose over the 2018 financial year, with gains in
the first half sustained for most of the second half. Broad-based
demand strength and the threat of supply disruption both
contributed to the improvement in prices. The rise in trade
tensions pushed copper prices down early in the 2019 financial
year. Grade decline, increased input costs, water constraints and a
scarcity of high-quality future development opportunities will
require attractive prices to secure sufficient investment to
balance the market, with new mine supply required in the early part
of the next decade."
On South American copper operations:
"During the June 2018 quarter, BHP successfully completed the
negotiations with Spence Union No1 (operators and maintenance) and
Cerro Colorado Union No2 [supervisors and staff] with the new
agreements effective from 1 June 2018 and 1 July 2018 respectively,
each valid for 36 months. On 17 August 2018, Escondida successfully
completed negotiations with Union No1 and signed a new collective
agreement, effective for 36 months from 1 August 2018. On 19 June
2018, BHP entered into an agreement to sell Cerro Colorado to EMR
Capital(x). The transaction is expected to close during the
December 2018 quarter, subject to financing and customary closing
conditions."
Write to David Hodari at david.hodari@wsj.com
(END) Dow Jones Newswires
August 21, 2018 07:41 ET (11:41 GMT)
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