BHP Billiton today gave an optimistic outlook for commodities, helped by strong sales of iron ore to China, and set the bar higher for this year.

The London-listed company highlighted price recoveries across iron ore, copper, aluminium and nickel in the December quarter. It shipped half its record quarterly production of iron ore to China and was also helped by inventory rebuilding in developed economies.

Half the 32.45 million tonnes of iron ore BHP produced in the quarter from Australia and Brazil went to China, where steel mills prefer imported ore because it contains more iron.

Data due out tomorrow is expected to show that China returned to double-digit economic growth in the fourth quarter — reflecting healthy underlying demand for energy and resources by BHP's top customer.

BHP said: “Government stimulus measures appear to have supported a gradual return to normalised global trade, albeit from a low base, and most key indicators across the developed economies showed improvement.”

The group added a note of caution, saying commodity prices could remain volatile as rich economies withdraw stimulus funding, but analysts called it a strong showing, underlining their forecasts for a further run-up in prices. “It's an impressive production scorecard,” Bank of America Merrill Lynch said in a client note.

BHP's production of iron ore, the main material used to manufacture steel, leapt 11 per cent in the quarter from a year earlier, mirroring strong production data from rivals Rio Tinto and Vale. BHP is third-largest of the three major producers.

By tapping new deposits in Australia's rich Pilbara iron belt as part of a multi-year “rapid growth project”, BHP is planning for its iron ore production to grow 36 per cent to 155 million tonnes this year and by a further 50 million by the end of next year.