BHP Billiton Ltd, the world’s biggest mining company, sees early signs that commodity markets are rebalancing, with oil and natural gas best placed to deliver gains into 2018.
“Fundamentals suggest both oil and gas markets will improve over the next 12 to 18 months,” BHP chief executive officer Andrew Mackenzie said yesterday in the company’s first-quarter production report.
“Iron ore and metallurgical coal prices have been stronger than expected, although we continue to expect supply to grow more quickly than demand in the near term,” he said.
BHP shares slumped 0.8 percent to close at A$22.47 (US$17.27) in Sydney trading, trimming its advance this year to 26 percent.
BHP joins Rio Tinto Group in expressing increased optimism on the outlook for commodities amid continued strong demand in China. Raw materials will probably see a broad-based recovery next year after an expected strong performance in the final quarter of this year on improving demand, according to Barclays PLC.
The Bloomberg Commodity Index has surged about 85 percent since it touched an almost 13-year low in January.
The iron ore price has gained 34 percent this year, while the oil price has advanced about 14 percent since OPEC last month agreed the outline of a deal that would cut production.
BHP’s full-year copper guidance of 1.66 million tonnes is under review following a two-week power cut in South Australia that has halted some output at its Olympic Dam mine, the company said.
Copper output in the three months ended on Sept. 30 declined 6 percent to miss estimates on lower grades at Chile’s Escondida, and amid both maintenance work and the power outage at Olympic Dam. Petroleum and iron ore output both beat analysts’ estimates.
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