Whether it's vehicle construction, a booming housing market in many places, or massive investments in public infrastructure: the world is really hungry for industrial metals. Prices are rising at a correspondingly rapid pace: The two most important representatives of the segment, aluminium and copper, are both showing increases of around 50% over a 12-month period. Meanwhile, the next-maturity futures contract for iron ore, the basic material for steel production, has almost doubled in the same period. BHP's stock may not be able to keep pace here. Nevertheless, the mining giant made a strong comeback after selling off in the wake of the first Corona wave, with the large cap charting an upward trend from the mid-March 2020 low. While BHP is already trading at an all-time high on the Sydney Stock Exchange, it is still a short way from the record high of GBp 2,467 reached at the end of 2010 on the London Stock Exchange.
The primary listing on these two stock exchanges reflects the DNA of the commodities group. In March 2001, the company was formed from the merger of Australia's Broken Hill Proprietary (BHP) with Britain's Billiton. Two decades later, the industry giant is doing all it can to capitalise on the high demand for its products. BHP has just reported record-high iron ore production of 253.5 million tonnes for the 2021 fiscal year (ended June 30). Here, the group benefited from peak operations at two mines located in western Australia. In the copper segment, on the other hand, production stops due to corona slowed down output. Although production increased again by 3% in the final quarter, the Group produced about 1.6 million tonnes of the red metal for the year as a whole, 5% less than in the previous period.
On the cost side, the Group had to absorb an increase in connection with the temporary mine closures as well as higher depreciation. Nonetheless, analysts expect BHP to present strong earnings figures for the fiscal year ended June 30 on August 17. According to Reuters, the consensus for earnings per share is USD 3.53. If the experts are right, BHP would have more than doubled its surplus from the 2020 fiscal period. The shares of the industry giant could do well with a positive boost - at least in London. Since the beginning of the year, the GBp quote has been moving in a sideways corridor. On the upside, it was not enough for an attack on the GBp 2,400 mark. Meanwhile, a solid horizontal support has emerged in the area of GBp 2,000.
The protection threshold of the new soft callable Barrier Reverse Convertible on BHP Group is likely to be around 500 pence lower. The structured product will have an initial barrier at 65% of the then prevailing strike price. The CHF-denominated Barrier Reverse Convertible pays a quarterly distribution of 8.00% p.a.. The term of the product ends after 15 months at the latest. However, due to the soft callable feature, there might be an earlier redemption of the nominal and the pro-rata coupon. Termination of this structured product is possible for the first time after half a year and then every three months.
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