BHP Billiton (BHPB) is much more upbeat about its iron ore prospects than it was 12 months ago. This message came as the miner presented its 2017 half year financial results monitored by Kallanish.

Iron ore prices improved over the half year to December 2017, the miner says. Demand for high-grade products remained firm on the back of high steel margins, which benefitted from Chinese steel supply-side reforms and winter production restrictions. This has resulted in an elevated price differential between high and low-grade ore price indexes. “In the medium-to-longer term, ongoing Chinese supply-side reforms, the shift of steel capacity to coastal regions and more stringent environmental policies are expected to underpin demand for high-quality seaborne iron ore,” BHPB says.

West Australian Iron Ore unit cash costs declined by -1% to $14.90/tonne in H1 17, despite the impact of a stronger Australian dollar. In local currency terms, WAIO unit costs declined by 6%. Cash costs as defined above exclude freight and royalties. Unit cost guidance for the 2016 financial year remains unchanged at less than $14/t (based on an exchange rate of AUD/$0.75). “In the medium term, we expect to lower our unit costs to less than $13/t,” BHPB says.

The miner’s average realised iron ore price climbed year-on-year for H1 17 by 32.6% to $57/wet metric ton fob from $43/wmt in the prior-year period. Half-yearly revenues and earnings were both affected as a consequence.

Underlying Ebitda from the iron ore segment rose by 3.5% y-on-y to $4.307 billion on revenue of $7.221 billion, itself up by 4.2% on the same basis.