The world's largest miner is bucking today's downtrend after management posted a pleasing quarterly production report that was devoid of any real bad news.
Shares in BHP Billiton Limited (ASX: BHP) jumped 0.7% in early trade to $24.16, while shares in Rio Tinto Limited (ASX: RIO) slipped 0.3% to $52.01 as the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) fell 0.5% into the red.
BHP is reiterating full year guidance for all of the commodities it produces and said iron ore output increased 7% to 61.3 million tonnes in the September quarter.
While this was largely in line with what analysts polled on Bloomberg were expecting, investors were relieved that management isn't trying to "manage down" expectations as it has done earlier in the year.
The increase in output of the steel making ingredient will add to worries about the oversupplied market as it comes hot on the heels of Brazilian giant Vale's record quarterly production numbers.
But BHP investors aren't too worried about that – at least not this morning – as they also cheered the fact that production of other key commodities came in ahead of expectations.
Copper output of 377,000 tonnes was 9,000 tonnes above the median estimates, while petroleum and metallurgical coal also came in slightly ahead of forecasts.
The Big Australian is also squeezing extra savings by cutting its capital expenditure for its petroleum business to $2.9 billion from $3.1 billion for the current financial year.
BHP has four major projects worth $7 billion under development in petroleum, copper and potash. These projects are tracking to budget and schedule.
The miner is aiming to produce 247 million tonnes of iron ore, 237 million barrels of oil, 1.5 million tonnes of copper and 80 million tonnes of coal in 2015-16.
The slump in commodity prices has left resource companies scrambling to cut costs and ramp up output to offset sharply declining prices for hard commodities and energy.
I think BHP looks cheap and I am expecting similar solid production reports from the miner for the next few quarters, but I'll admit that is probably not enough to win over sceptics as a number of analysts are predicting further falls in commodity prices, such as iron ore.
Some believe that buying BHP or Rio Tinto now is like catching a falling knife but there's no denying that their balance sheets are the healthiest among global miners.
This ensures they will emerge from the commodity rout as the strongest players and none of this outcome is priced into their shares.
