BHP has weighed in on the iron ore market, providing several insights into pricing dynamics and the emergence of higher-grade iron ore from its operations.
“The market was supported most recently by the elevated blast furnace run rate in China and several disruptions to iron ore supply, including weather-related impacts to seaborne supply and the extended impact of safety inspections at Chinese domestic iron ore mines,” BHP’s ‘Economic and Commodity Outlook’ report said.
Depleted Chinese stocks has seen the iron ore price (CFR China) rise 12 per cent since early May.
BHP said it will benefit from the entry of higher-grade supply from its Simandou project in Guinea, where first tonnes are expected by the end of this year.
“We expect these volumes to primarily produce higher grade fines, rather than mid-grade brackets, like those from the Pilbara,” the report said.
BHP also expects India to be an “opportunistic importer” during periods of domestic supply disruption.
“These evolving market dynamics will make it even more important to create competitive advantage and to grow value through driving exceptional operational performance,” the report said.
“The external environment in fiscal year 2025 was dominated by policy uncertainty, with tariffs, fiscal, monetary and industrial policy, shaping investment and trade flows.
“Despite these dynamics, demand for BHP’s commodities has been resilient and in the case of copper, demand has been higher than previously expected.”
That resilience is also clear in iron ore, with the company estimating cost support for seaborne supply sits at $US80–100 per tonne cost and freight (CFR), with about 180 million tonnes of higher-cost production under pressure at the top end of that range.
BHP has proven its strength in the Pilbara, with Western Australia Iron Ore (WAIO) setting multiple records, producing 257 million tonnes in the 2024–25 financial year (FY25) with 290 million tonnes (Mt) produced on a 100 per cent basis. The new South Flank iron ore operation exceeded its nameplate 80Mt capacity in its first full year.