BHP's Q2 report: Iron ore production exceeds expectations, copper misses, nickel woes persist

BHP (ASX: BHP) says the company had a "solid first half", with WA iron ore production up 5% quarter-on-quarter and first half copper production up 7%.

The production figures were relatively mixed against consensus expectations but likely eclipsed by downbeat economic data from China and the recent resurgence of the US dollar. BHP shares moved 1.8% lower as the market opened.

BHP 12-month price chart (Source: Market Index)

We'll be highlighting how BHP's second-quarter production figures fared against expectations as well as some of the key takeaways from each of its commodity segments.

Iron Ore

• Production: 65.8Mt, up 4% quarter-on-quarter but down 2% year-on-year

• Expectations: Slightly ahead of consensus expectations of 64.9 Mt

• Average realised prices: US$103.7 per wet metric tonne for the first half of FY24, up 21% year-on-year

• Key takeaways: While production was a small beat, quarterly iron ore shipments of 63.9Mt was well-below expectations of 72.2Mt. The South Flank project in WA officially opened in October 2021 and BHP says its on track to ramp up to full production capacity of 80 Mtpa by the end of 2024.

Copper

• Production: 437.4kt, down 3% quarter-on-quarter but up 3% year-on-year

• Expectations: Missed market expectations of 448.7kt

• Averaged realised prices: US$3.66/lb for the first half of FY24, up 5% year-on-year

• Key takeaways: Successful integration of Oz Mineral assets. Improved production across both Australian and Chile assets.

Met Coal

• Production: 5.7Mt, up 2% quarter-on-quarter but down 18% year-on-year

• Expectations: Below market expectations of 6.3Mt

• Averaged realised prices: US$266.4/t for the first half of FY24, down 1% year-on-year

• Key takeaways: There was a fatal injury on 15 January and investigations are underway. Operations at Saraji were suspended and expected to progressively restart over the coming days. Lower production was a result of a significant increase in planned maintenance across assets.

Energy Coal

• Production: 3.9Mt, up 7% quarter-on-quarter and 35% year-on-year

• Expectations: Ahead of consensus expectations of 3.2Mt

• Averaged realised prices: US$123.3/t, down 65% year-on-year

• Key takeaways: Strong operating performance (improved labour conditions and weather) enabled an uplift in production.

Nickel

• Production: 19.6kt, down 3% quarter-on-quarter but up 11% year-on-year

• Expectations: Slightly below expectations of 20.2kt

• Averaged realised prices: US$18,602/t for the first half of FY24, down 24% year-on-year

• Key takeaways: "The nickel industry is undergoing a number of structural changes and is at a cyclical low in realised pricing. Nickel West is not immune to these challenges. Operations are being actively optimised, and options are being evaluated to mitigate the impacts of the sharp fall in nickel prices," the company said in a statement.