BHP's Mackenzie Still Sees Downside Risk for Iron Ore

- March 15th, 2016

CNBC reported that even though the broader commodities rout seems to be ending, Andrew Mackenzie, chief executive of BHP Billiton Ltd. (ASX:BHP,NYSE:BHP,LSE:BLT), believes that the iron ore price is still faces some downside risk.

CNBC reported that even though the broader commodities rout seems to be ending, Andrew Mackenzie, chief executive of BHP Billiton Ltd. (ASX:BHP,NYSE:BHP,LSE:BLT), believes that the iron ore price is still faces some downside risk.
As quoted in the market news:

Andrew Mackenzie admitted that the “collapse of OPEC” and sustained slide in oil prices caught the mining giant by surprise, although “there are some signs that may have bottomed”, which may stem the spillover on other commodities, he said.
In December, the Saudi Arabia-led Organization of Petroleum Exporting Countries declined to cut production, even amid a global oil oversupply, leading to further price falls. Subsequent attempts by OPEC and non-OPEC producers to agree a deal on production levels have so far proved fruitless.
But the mining boss had a less positive outlook on one of BHP’s key product.
“The reality is … the supply of low-cost iron ore continues to grow at a faster rate than demand is increasing,” Mackenzie said on the sidelines of the Australian Financial Review Business Summit in Melbourne.
“So, of all the products that we produce, it has the greatest risk of price downside, but we still make the most money in it. So, if we can continue to reduce the cost of producing iron ore in Australia, we can win market share, and we can still make appropriate profits.”

Click here to read the full CNBC report.

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