Here's What The World's Commodity King Is Saying About The Fate Of The Global Economy

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As one of the world’s leading commodity producers,  BHP Billiton (BHP) has its pulse on the global commodities economy like few others.

That’s why our ears perked when the company cautioned investors about the world’s near-term outlook.

Still, there’s some important nuance to their message since the long-term drivers for commodities remain very strong. For some commodities, they’re even achieving record production levels and expanding. Their view thus implies some pretty volatile markets going forward.

BHP's petroleum production is at record levels

'Petroleum delivered its third consecutive annual production record following the successful delivery of a series of growth projects in the Gulf of Mexico and Australia. BHP Billiton operated Shenzi and Pyrenees performed at or above design capacity during the year. This strong performance was partially offset by natural field decline and the suspension of drilling activities in the Gulf of Mexico.'

Source: BHP Production Report

Iron ore production at record levels

'Record production was achieved for the year ended June 2010. Current quarter production was impacted by tie-in activities at Western Australia Iron Ore as Rapid Growth Project 4 continues to ramp up.'

Source: BHP Production Report

But... they warned about near-term global growth

'BHP Billiton continues to be cautious on the short term outlook for the global economy. Uncertainty surrounds the near term prospects for growth in the developed world as governments adjust fiscal policies following a period of significant stimulus and subsequent increase in sovereign debt levels. Within China, measures introduced to reduce growth to more sustainable levels means volatility in commodity end-demand is likely to persist. BHP Billiton sees these measures as a normal continuation of China's economic management policies.'

Source: BHP Production Report

Without stimulus, expect a slip

Source: BHP February Results Report

China saved commodities after the crisis

Source: BHP February Results Report

Prices have recovered much their lost ground as the world, especially China, rebounded

Source: BHP February Results Report

Despite the near-term caution, in the long-term China still has a LONG way to go in terms of demand growth

Source: BHP February Results Report

China will outstrip U.S. GDP growth massively. Note they don't expect much from the U.S. over the next 15 years.

Source: BHP February Results Report

BHP is feeding China in a multitude of ways, yet is also globally diversified

Source: BHP February Results Report

In particular, they really have China's coking coal market locked-down (used to make steel)

Source: BHP February Results Report

Thus despite the potential for a near-term slow down, they expect business to boom

Source: BHP February Results Report

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