Just a couple lines in the annual report. But enough to be seized upon by a world aching for some hint of what the future may hold.
BHP (BHP) chairman Jac Nasser believes commodity prices will continue to weaken in the short term as the dramatic lift in global supply weighs heavily on the delicate balance with demand.
Which commodities? He didn't elaborate. Coal clearly has been a major casualty, even coking coal which is a key steel making ingredient. But when Nasser talks commodities, it is assumed he means iron ore.
While Nasser's comments have been seized upon as a revelation, it is the same message the company delivered in March this year on its iron division.
Surprisingly, iron ore prices have remained remarkably strong in the current quarter, unlike last year when they tanked as Chinese steel mills opted to run down reserves and cut imports.
Despite countless predictions of prices settling below $US120 a tonne this year and falling to as low as $US90, spot iron ore has remained remarkably strong, and continues to hold above $US132 a tonne.
According to Nasser, while the long term fundamentals remain sound, the recent increase in supply has exerted downward pressure on commodity prices, a trend he says BHP expects to continue in the short term.
Ultimately, Nasser believes an improving global outlook and continued development in Asia combined with the sudden cutback in investment by resource houses will create a more balanced market.
But – and it is a big but – the company is factoring in higher output at lower unit cost to maintain earnings momentum.
This is where BHP has an advantage over its rivals. Its vast spread of income – in commodities and geographies – from potash to nickel, oil, gas, coal and iron, makes it far less vulnerable to the vagaries of a downturn in any one market.
Rio Tinto (RIO), by contrast, now derives around 90% of its income from iron ore. Fortescue Metals (FMG) is a pure iron ore play.
And it has the balance sheet muscle to withstand a slump. Rio, meanwhile, is gradually getting its finances in order while Fortescue faces the daunting prospect of repaying $US12 billion over the next 9 years.