Commodity alert as China cuts steel output

Chinese steel mills have begun cutting production as record stockpiles continue to build, signalling further weakness for iron ore and coking coal prices and a slowing growth in the world’s second biggest economy, according to the Australian Financial Review.

A sluggish construction market and a lack of additional stimulus measures from Beijing has China on track to record its first annual decline in steel production in 31 years, analysts said.

The weak Chinese steel market will put pressure on miners BHP Billiton and Fortescue Metals Group (which report this week) and Rio Tinto. All are expecting demand for iron ore to rally in the second half of this year.

Profit fall for BHP expected this week

BHP Billiton will post this week its first profit fall in three years in what some will see as a symbolic end to the mining boom, according to the Sydney Morning Herald.

A year ago the biggest company on the domestic sharemarket reported an Australian corporate record $US22 billion full-year operating profit. This time around, the market consensus is for BHP to report a $US16.9 billion net profit when it reports on Wednesday, which will end its run of ever-increasing record profits over the past three years.

Its chief executive, Marius Kloppers, has been criticised over the wisdom of the big miner's bet on US shale under his watch, after it wrote down those assets and its Australian nickel mines by $US3.3 billion last month.

Tinkler concern over late super payment

The horseracing interests of mining magnate Nathan Tinkler are in deep financial crisis after having failed to meet the superannuation payments of its workers since November, according to the Sydney Morning Herald.

Internal documents from Tinkler's racing company, Patinack Farm, show staff are on the point of ''mutiny'' after a series of failed promises to have the unpaid superannuation made up.

It is also understood that, following complaints from employees, the Australian Taxation Office has begun an investigation.

BlackRock raises Rio stake in London

Blackrock, the world's biggest institutional owner of mining stocks, has boosted its holdings in Rio Tinto through about $300 million of net purchases over the past five months, but has reduced its stake in the dual-listed mining giant's Australian-listed stock, according to The Australian.

The fund manager, which is Rio's biggest institutional shareholder, has reweighted its holdings in favour of Rio's London-listed stock, again highlighting the traditional discount of the London stock to the Australian shares.