BHP Leads Miners with 63% EBITDA Margin as Iron Ore Hits $105/T
Iron ore prices have rebounded to about $105 per tonne from near $96 during the Chinese New Year lull, while Chinese port inventories climbed by 19 million tonnes year-on-year to roughly 163 million tonnes, their highest level in over three years. BHP posted an EBITDA margin of 63% and EBITDA of $58 per tonne in the second half of 2025, positioning it as the highest-margin iron ore producer despite UBS’s neutral rating on its stock.
1. Iron Ore Price Recovery and Inventory Build
Iron ore prices have recovered to around $105 per tonne after dipping to $96 during the Chinese New Year period, while Chinese port inventories rose by 19 million tonnes year-on-year to roughly 163 million tonnes, their highest level in over three years.
2. BHP’s Margin Leadership
BHP delivered an EBITDA margin of 63% and EBITDA of $58 per tonne in the second half of 2025, marking it as the highest-margin iron ore producer among major miners despite challenging market conditions.
3. UBS Rating and Free Cash Flow Outlook
UBS maintains a neutral rating on BHP, forecasting a 5% free cash flow yield for 2026 and highlighting both the solid margin profile and risks from elevated inventory overhang.
4. Chinese Steel Demand Trends
China's steel production fell 14% year-on-year in January, although blast furnace utilization remained near 86%, underscoring potential demand pressures that could influence iron ore consumption.