BHP Group Ltd. reported on Tuesday an increase in its profits for the year as a whole, reflecting the sale of its oil business and the strength in commodity prices. Here are a few remarks taken from its end-of-year report.


On steel:

“The global steel market opened the second half of fiscal 2022 with a bang, both in China and the rest of the world. [ROW], but momentum began to fade late in the period. While a steady improvement in end-use demand from China is expected, the slower-than-expected rebound in construction from the Covid-19 lockdowns has dampened sentiment across the steel value chain. In the rest of the world, steelmakers’ strong profitability in the March 2022 quarter had waned by the end of the June quarter as end-use demand weakened amid high input costs. Rest of the world steel markets are expected to remain under pressure in fiscal 2023 as the macroeconomic climate softens.”


On iron ore:

“The iron ore market was firm for much of the second half of fiscal 2022, supported by resilient demand, limited supply of competing scrap in China and weaker than expected shipping supply from some of the producers. low-priced and swing. As a result, Chinese port inventories declined steadily for much of the period. The decline in iron ore prices towards the end of fiscal 2022 reflects weakening sentiment in the supply chain. Looking ahead, the main near-term uncertainties are the pace of recovery in end-use demand for steel in China, how Chinese authorities will administer production cuts over the course of the remainder of calendar year 2022 to meet annual zero growth mandate, and marine supply performance.”


On iron and steel coal:

“Metallurgical coal prices reached record highs in the second half of fiscal 2022 due to firm ROW demand, uncertainty over Russia and multi-regional supply disruptions. ROW steel profitability at the end of the June quarter saw prices fall from their highs.The industry faces an uncertain outlook as natural trade flows are hampered, including China’s import policy China and Russian coal supply. In addition, Queensland’s main maritime supply region has become less conducive to long-term capital investment due to changes to the royalty regime.”


On thermal coal:

“Energy coal prices reached record highs in May 2022 amid very strong demand and tight supply. [liquefied natural gas] prices soared and warm weather in major importing regions all contributed to the rapid price increase. In the longer term, total coal-derived primary energy (electricity and non-electricity) should be challenged, especially in deep decarbonization scenarios where demand is expected to decline.”


On copper:

“Copper prices spent much of fiscal 2022 around all-time highs, supported by robust demand, low visible inventories, project delays and Russian supply risks. However, prices fell in two stages in the June quarter. The first decline was due to the demand impact of the Covid-19 lockdowns in China. The second was due to recession speculation in advanced economies. We believe the “Mining supply and scrap metal collection will increase over the next few years, covering near-term demand growth. Should be solid, while the mega-trend of electrification offers exciting benefits.”


On Nickel:

“The nickel market was in deficit throughout calendar year 2021 and the start of calendar year 2022. Visible inventories fell sharply, putting upward pressure on prices. These tight fundamentals emerged in due to a combination of strong demand from conventional end-use sectors, growth in the electric vehicle value chain, uncertainty over Russia and limited Class 1 supply in calendar year 2021. These forces culminated in a dramatic surge in LME prices in March 2022. Prices have since returned to pre-Russian invasion levels of Ukraine due to recession fears, alongside other exchange-traded commodities .”


Write to Rhiannon Hoyle at [email protected]