Should ETFs Steel Themselves for Continued Commodities Demand? | ETF Trends

Exchange traded funds (ETFs) for Australia and steel could benefit from BHP Billiton’s banner year of record profits.

The world’s largest mining company said that its net profit for the year ending June 30 rose 14.7% to $15.39 billion, reports the Associated Press. It was what analysts had been expecting, and was helped along by both increased production and higher prices for oil, copper, iron ore, coal and manganese.

BHP Billiton is in the midst of a hostile takeover bid of Rio Tinto, since they believe that a global slowdown shouldn’t affect demand for these commodities, reports Stacey Vanek-Smith for Marketplace.

There are questions about BHP’s $130 billion all-share bid, though. Some analysts think both companies are doing well enough on their own and don’t need to merge. Others feel that Rio could hold out for an even better offer. If the merger were to go through, the two companies would control one-third of the iron ore market.

  • Market Vectors Steel (SLX): down 9.1% year-to-date; Rio Tinto is 12.5%
  • iShares MSCI Australia (EWA): down 20% year-to-date; BHP is 16.8%; Rio Tinto is 4.4%
  • NETS S&P/ASX 200 Index Fund (AUS): down 15.9% since April 10 inception; BHP is 14%; Rio Tinto is 3.6%

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.