While profitability is still strong, both miners “are trying to prepare the market in case we see a significant slowdown in Chinese demand,” Gavin Wendt, a senior resource analyst at MineLife Pty said by phone. “The tougher conditions are coming at a time when prices they’re receiving from commodities are easing, putting pressure on margins.”
Commodities prices have slumped in recent months as demand wavers in China and forecasts multiply for recessions across developed economies. Iron ore, the biggest earner for both companies, plunged below $100 a ton last week as China tackled fresh turmoil in its beleaguered property market, including a wave of homebuyer boycotts of mortgage payments.
At the same time, miners face rising costs. “We expect the lag effect of inflationary pressures to continue through the 2023 financial year, along with labor market tightness and supply chain constraints,” BHP’s Chief Executive…
