Iron Ore & Coal Price Collapse Crushes Miners: BHP Profit Plunges 26%

TradingKey - Global mining giant BHP (BHP.US) reported full-year earnings showing annual profits declined 26% year-on-year to a five-year low, driven by sustained pressure from falling iron ore and metallurgical coal prices alongside weak demand.

The earnings report revealed profits of $10.16 billion for the year, down sharply from $13.66 billion in the prior year and slightly below Visible Alpha-compiled analyst expectations of $10.22 billion.

Revenue decreased by $4.4 billion during the reporting period, directly attributed to lower iron ore and metallurgical coal prices.

Specifically, the iron ore market faced significant downward pressure from multiple challenges, including weak global economic demand, steel supply gluts triggered by China’s real estate crisis, oversupplied seaborne markets, and high inventory levels at Chinese ports.

For metallurgical coal, growing domestic production and persistent inventory accumulation in China deprived the market of effective upward momentum, further intensifying profit pressures on BHP.

BHP’s profitability has shown a continuous downward trend, with earnings declining for three consecutive years since reaching a record $23.8 billion during the 2022 iron ore demand surge.

Despite these challenges, the company expressed cautious optimism about the future. CEO Mike Henry emphasized that while global economic growth faces deceleration risks due to uncertainties from "changing trade policies" (encompassing tariffs, fiscal policies, monetary easing, and industrial policies)—expected to slow to 3% or slightly below in the near term—commodity demand remains resilient, particularly in China and India.

At press time, BHP (BHP.AX) shares rose 1.28% to A$42.01 on the Sydney Stock Exchange.