BHP Billiton (NYSE: BHP): Stock of the Day
Iron Ore Rising…
Is the current rally in stocks is just a bear market variety, or is it the real thing? The debate has been going on for quite some time now…
And I don’t know the answer more than anyone else.
However, It stands to reason that one of the best indicators that might give us an early tip on recovery is iron ore shipments.
Iron ore is the basic component of steel, which is used in bridges, buildings, ships, pipes, cars and trucks. Even concrete highways and bridges have steel rebar embedded in them for added strength. It’s perhaps the largest ingredient in the infrastructure of the industrialized world.
World production of raw iron ore averages about 1 billion tons per year, with China alone producing nearly half the total. Australia and Brazil produce nearly 20% apiece, and roughly 54 other countries make up the rest of the production.
One of the largest producers of raw ore is mining giant BHP Billiton (NYSE:BHP), based in Australia. Engaged in the mining of metallurgical and energy forms of coal, oil, gas, diamonds and other base metals, Billiton also operates some of the largest iron ore mines in the world.
The company has 41,000 employees working over 100 mining and extraction operations in 25 countries around the world. Last year, the company generated revenues of nearly $60 billion, and roughly 25% of that was profit.
Rising Shipments: A Positive Sign
One of the best places to gauge iron ore shipments is Port Hedland, in western Australia. The Port Hedland Port Authority keeps track of iron ore shipped from its docks, and May’s total was 13.39 million tons, up 18% from April’s 11.33 million tons. BHP’s portion of May’s total was 11.12 million tons.
To put this in perspective, last June – at the height of the China driven boom – BHP shipped 12.26 million tons out of Port Hedland.
BHP recently put together a joint production venture with rival Rio Tinto, PLC (NYSE:RTP) that is expected to save the two companies $10 billion annually.
Both miners are trading roughly midway between their 52-week highs and lows, and are two of the best ways to gauge economic recovery from the ground up (pun intended).
Good investing,
Dave Fessler
- Adding Iron for a Healthy Portfolio
- Fuel Your Portfolio With BHP Billiton (NYSE: BHP): The Best-Run Commodities Company In The World
- Five Ways To Profit From The Commodity Nobody Likes
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One Response to “BHP Billiton (NYSE: BHP): Stock of the Day”
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June 24th, 2009 at 11:29 pm
BHP “The Big Australian”is a largest diversified miner in the world & has been in my portfolio(on & off being cyclical commodity stock)since 1975. Olympic mine is the largest Uranium reserve in the world & over next few years will contribute significant numbers to the bottom line.
So keep buying for medium to long term & will help built your wealth in any type of portfolio.
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