Iron Ore Prices Fall Amid Weaker Demand — Market Talk

Palm oil rises in Asian trade, helped by higher palm olein on the Dalian Commodity Exchange, says David Ng, a trader at Kuala Lumpur-based Iceberg X. Expectations of strong festive-driven demand from India in the coming weeks are also supporting prices, he adds. Ng sees support for crude palm oil futures at 4,500 ringgit a ton and resistance at 4,650 ringgit a ton. The Bursa Malaysia Derivatives contract for November delivery is 46 ringgit higher at 4,605 ringgit a ton.(yingxian.wong@wsj.com)

By Rhiannon Hoyle

BHP Group reported a 14% rise in annual profit but dialed back its payout to investors as lower iron ore and coal prices weighed on underlying earnings.

Australia-based BHP, the world's most valuable miner, reported a net profit of $9.02 billion for the 12 months through June. That was up from $7.90 billion the year prior, when large one-time charges, including a $2.7 billion impairment of some Australian nickel operations, weighed on its bottom line.

Annual underlying earnings were lower year over year, as higher copper prices failed to offset the impact of weaker prices for iron ore and coal. The price that BHP was paid for iron ore, which accounts for more than half of its earnings, fell by roughly one-fifth.

BHP reported an underlying profit of $10.16 billion, down by 26% from a year earlier. Analysts expected an underlying profit of around $10.22 billion, according to a consensus collated by Visible Alpha.

Directors declared a final dividend of 60 U.S. cents a share, down from 74 cents a year earlier but surpassing market expectations of a 51-cent payout. Shares in the company were 1.0% higher late morning in Sydney.

Chief Executive Mike Henry said the payout, representing 60% of underlying profit, reflects a strong performance by the miner against a backdrop of lower prices. BHP pledges to pay shareholders at least 50% of the underlying attributable profit each reporting period.

BHP set new production records at its copper and iron-ore operations, said Henry. Its production or so-called unit costs fell by nearly 5%.

The miner also had excess cash to reward shareholders after this month agreeing the sale of its Carajás assets in Brazil to CoreX, founded by Turkish billionaire Robert Yildirim, for up to $465 million.

BHP has been narrowing its focus on the biggest and most lucrative mines in commodities it expects will be in high demand for decades to come. The company wants to be bigger in copper, an industrial metal that's arguably the most critical for the energy transition, and plans to start producing fertilizer ingredient potash, which it says will be needed for more efficient and sustainable farming.

On Tuesday, BHP said it will raise its net-debt target range as it seeks to balance shareholder returns with spending on growth projects in those commodities. It last revised its target in 2022.

"Part of the impetus for a regular review is looking at the investment opportunities ahead of us as a company and, through all the work that we've undertaken in recent years, we have a lot more growth optionality ahead of us," said Henry.

The miner will now target net debt of between $10 billion and $20 billion, from between $5 billion and $15 billion before. It reported net debt of $12.92 billion as of June 30, up from $9.12 billion a year earlier.

Henry said the change hasn't been made to give the miner headroom for future acquisitions. Valuations on the kind of assets that interest BHP remain elevated, and it would be hard to both pay a takeover premium and get enough value for shareholders, he added.

"We've been quite clear that M&A is but one of our levers for growth and, frankly, in current markets it's hard to see the right combination of the commodities that we like, the asset quality that we like, at a price where we can still unlock attractive value for BHP shareholders," Henry said.

Earlier this year, BHP and Lundin Mining jointly acquired Canadian exploration company Filo in a deal that cost BHP around $2 billion. Last year, it sought to buy Anglo American with a nearly $50 billion takeover bid but was rebuffed by directors at the rival miner.

The company is navigating a mixed global economic outlook, Henry said. Policy uncertainty, particularly around tariffs, is elevated and continues to influence investment and trade flows, according to the miner.

In iron-ore markets, prices have been weighed down by an ongoing slump in Chinese real estate, while a global glut is weighing on prices of steelmaking coal.

Overall, demand for most of its commodities in the first half of 2025 was stronger than BHP expected.

Global economic "growth is expected to ease to 3% or slightly below in the near-term amid shifting trade policies, yet demand for commodities remains strong, particularly in China and India," Henry said.

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

Gold prices held steady around $3,330 per ounce on Tuesday as investors weighed US-led efforts to end the war in Ukraine and look ahead to the Federal Reserve’s annual Jackson Hole symposium.

Following his Monday meeting with Ukrainian President Volodymyr Zelenskiy and European leaders, US President Donald Trump said he had spoken with Russian President Vladimir Putin and was working to arrange a direct meeting between Putin and Zelenskiy, to be followed by a trilateral summit among the three presidents.

This raised hopes for a potential peace deal, though investors remained skeptical about an imminent breakthrough.

Attention is also firmly on Fed Chair Jerome Powell’s speech in Wyoming later this week, where traders are looking for clues on whether the US central bank will resume cutting interest rates in September.

Copper edges higher in early morning trade. Prices are likely to remain range-bound in the short term with a slight upward bias, Nanhua Futures analysts say in commentary. Many industry insiders seem less worried about U.S. tariffs than before, the analysts say. Investors will be closely watching the Fed's Jackson Hole symposium later this week for any hints of U.S. rate cuts down the road. The three-month LME copper contract is 0.2% higher at $9,751.50 a ton. (tracy.qu@wsj.com)

Genting Plantations' unit's proposed JV with China's Shouguang Vegetable Science & Technology to develop a 70-acre tropical vegetable hub in Malaysia's Johor looks neutral, CIMB Securities analysts Ivy Ng Lee Fang and Lim Yue Jia say in a note. The project, estimated at 525 million ringgit, will cover seed breeding, greenhouse farming, import and export of agricultural products. Genting's share of the investment is about 315 million ringgit. While the partnership broadens exposure to seed breeding and greenhouse production, they expect limited near-term earnings impact due to high upfront costs and its diversification away from core palm oil business. Still, recent land sale proceeds of 333.8 million ringgit can help fund the investment, they add. CIMB maintains a hold rating on Genting Plantations with an unchanged target price of MYR5.28. Shares are 0.4% higher at MYR4.97. (yingxian.wong@wsj.com)

Wheat decreased to 500.50 USd/Bu, the lowest since August 2024.

Over the past 4 weeks, Wheat lost 7.65%, and in the last 12 months, it decreased 6.05%.