BHP Group Ltd., the world's largest miner by market value, Tuesday reported a more than doubling of first half profit in big part because of high commodity prices. Here are some remarks from its midyear fiscal report.


On China's steel market:

"In the half year ended 31 December 2021, the key theme in steel was a policy induced production crunch in China. The starting point for Chinese output expectations in the 2022 calendar year is zero growth from the 1.033 billion [metric] tons produced in 2021. End-use demand in China is expected to firm over the course of the 2022 calendar year, as easier policy gradually takes hold. As is common at the start of a new five-year plan, infrastructure is expected to be supportive of steel demand."


On iron-ore prices:

"Iron-ore prices declined in the first half of the 2022 financial year as China's steel production curbs took hold, while seaborne supply improved. Prices have since stabilized and recovered, albeit not to the previous highs. In the medium term, China's demand for iron ore is expected to be lower than it is today as crude steel production plateaus and the scrap-to-steel ratio rises. In the long-term, prices are expected to be determined by high cost production, on a value-in use adjusted basis, from Australia or Brazil."


On copper prices:

"Copper prices have receded slightly from the record highs established in the second half of the 2021 financial year, but they remain very high in absolute terms. Longer term, both demand and supply factors indicate that copper is an attractive avenue for future growth."


On nickel prices:

"Nickel prices performed well over the first half of the 2022 financial year and the positive momentum continues. Depleting stocks was a recurrent theme over the half, with strong demand from both traditional uses and batteries coupled with supply uncertainty. Longer term, we believe nickel will be a core beneficiary of the electrification megatrend and that nickel sulphides will be particularly attractive."


On steelmaking coal:

"Metallurgical coal prices surged to record highs in the first half of the 2022 financial year on multi-regional supply constraints amidst challenging operating conditions. Even so, the industry faces a difficult and uncertain period ahead while natural trade flows are impaired. Longer term, high quality metallurgical coals will continue to provide value-in-use benefits to integrated steelmakers as they seek to optimise the energy and emissions intensity of their operations. This will particularly be the case in emerging Asia, where the blast furnace fleet is still young, and transitional technologies are expected to dominate decarbonisation efforts in the next 20-30 years."


On oil market:

"Beyond the current phase, considerable investment is going to be required to fill the medium and longer term supply-demand gap we expect to emerge. If that investment is not forthcoming in a timely way, the possibility of oil prices moving up aggressively cannot be ruled out."


On BHP's iron-ore output:

"On 7 September 2021, BHP received regulatory approval to increase capacity at our Port Hedland operations up to 330 million tons per annum (100 per cent basis), subject to the outcomes of standard appeals processes. Our near-term focus remains on sustainable achievement of 290 million tons per annum of iron ore, with plans to creep beyond this through productivity improvements in the medium term."


Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com


(END) Dow Jones Newswires

02-14-22 1720ET