Blue chip stock BHP Billiton is the world’s largest diversified resources company and a major player in the commodities market. It is currently Australia’s heaviest weighted stock with a market capitalisation of $148 billion.
BHP has reached agreements with Asian customers to move to short-term iron ore pricing contracts.
This follows an earlier agreement by BHP and Japanese steel mills to price coking coal on a quarterly basis.
Under the new iron-ore agreement, BHP has made a significant step in its campaign to move pricing of bulk commodities to a quarterly basis.
BHP has long argued short-term pricing is more transparent as it more closely reflects market-based, or spot, prices.
Since spot prices are currently much higher than the annual contract prices, BHP and other major miners stand to reap a major windfall from shorter-term contract pricing.
BHP’s Australian share price has been performing consistently, sitting at around the $44.00 mark after its low of $20 in late November 2008 and is certainly one of the stocks to watch.