BHP Billiton upbeat on commodities outlook

BHP Billiton, the world's largest diversified miner, has said it is optimistic of the outlook for raw materials markets over the next 18 months.

The Australia-based company said it expected an oversupply of iron ore and coal to persist in the near term but added that there were early indications that the glut might be easing.

It reported a 15% annual decrease in petroleum production in the September quarter and a 6% drop in copper output.

Iron ore production was unchanged from the same period a year ago, while metallurgical coal output edged up 1%.

BHP reported a record loss of $6.4bn (£5.2bn) for the year to 30 June as a result of a slump in commodity prices.

"We have seen early signs of markets rebalancing," BHP chief executive Andrew Mackenzie said in a statement.

"Fundamentals suggest both oil and gas markets will improve over the next 12 to 18 months.

"Iron ore and metallurgical coal prices have been stronger than expected, although we continue to expect supply to grow more quickly than demand in the near term.

"Together, the combination of steadier markets, continued capital discipline, improved productivity and increased volumes in copper, iron ore and metallurgical coal should further support strong free cash flow generation this financial year," Mackenzie added.

BHP has been hard-hit by the collapse in oil prices and a slowdown in China causing a slump in demand for commodities such as iron ore and coal.

Its earnings over the past year were also negatively affected by the collapse of a dam it partly owns in the Brazilian state of Minas Gerais in November 2015.