BHP Billiton
BHP Billiton (ASX:BHP) is a global leader in the resources industry.
Formed from a merger between BHP and Billiton, the company is a leader in the extraction and sales of most natural resources, and is particularily strong in Iron Ore, Coking and Thermal Coal, Copper, Zinc, Oil & Gas, Diamonds and most materials key to the production of steel.
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Analysts expect upbeat BHP quarterly results on increased Chinese demand
BHP Billiton Ltd is set to unveil a recovery in Australian coal exports in its June quarter production report on Wednesday as improving global steel output boosts demand for metallurgical coal.
Strengthening steel production towards the end of the quarter could also help iron ore output to beat forecasts, particularly if the group had resolved safety issues arising from fatalities at its Western Australian iron ore operations.
BHP's rival, Rio Tinto (ASX: RIO), last week posted a stronger-than-expected, 8% rise in June quarter iron ore output, driven by strong sales to China despite haggling over annual contract prices at talks yet to be officially concluded.
"We expect BHP to report production numbers ahead of guidance for manganese and metallurgical coal," UBS said, pointing to Australian Bureau of Statistics data that showed Australian coal exports rising towards the end of the quarter and data showing improving global steel production.
Manganese and metallurgical coal are both used in the steel-making process.
ABN AMRO resources analyst Warren Edney also expects BHP to beat its guidance for metallurgical coal production and possibly iron ore as the group responded to China's increased appetite for imported iron ore, partly driven by the closure of high cost mines in China.
Demand for metallurgical coal has been stronger than the company expected," said Edney.
BHP had indicated that year to June 2009 production of metallurgical coal, used in the steel-making process, was likely to be 10-15% below current capacity on an annualised basis, implying output of 49-52 million tonnes but UBS said output could top 55 million tonnes.
Similarly, BHP had suggested manganese ore output was likely to be 30% lower than a year earlier while manganese alloy output would fall 35%.
UBS expects the declines to be more modest at around 22% for manganese ore production and 26 percent for alloy used in steel manufacture.
The quarterly report should also reflect BHP's continued expansion of its Western Australian iron ore operations to keep up with demand, ABN's Edney said.
He said port data showing BHP's shipments of iron ore from Western Australia's Port Hedland suggested the performance of the group's iron ore division might also be better than expected.
The data shows BHP's Australian iron ore shipments totalled 29.5 million tonnes in the June quarter compared with 28.2 million tonnes in the March quarter.
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