CITI and ABN Amro Morgans have kept their hold ratings on Australia’s largest miner in the wake of its “lacklustre” but not unsurprising production results released this week, especially given the news the miner has sold 28% of its iron ore over the past nine months into the spot market.

An iron ore shiploader at BHP Billiton's Pilbara operations

Citi said the major miner’s production results were weak across the board, with iron ore and energy coal right about where it expected, while manganese and coking coal were weaker than anticipated.

The broker noted one of the big risks to BHP’s next profit statement was the percentage of iron ore tonnes it had been selling into the spot market.

On Wednesday BHP revealed that year to date it had sold 72% of its iron ore on benchmarks, with the implication that the remaining 28% had been sold on the spot market.

Citi said with spot prices hovering at around $US65 per tonne, compared to contract prices of around $US87/t for fines, there was some substantial downside risk to BHP’s profits.

ABN Amro looked at the numbers in more detail, estimating that around 25% of BHP’s spot sales would be at a 20% discount to benchmark, with the remainder closer to the 40% discount spot prices currently fetch compared to benchmark pricing.

The company said it would now need to make adjustments for this pricing to its modelling.

On the back of the iron ore numbers and weak demand for coal and other commodities like manganese, even though BHP reported better than expected copper results, both broking houses continued to rate BHP as a hold.

Citi’s share price target for BHP is unchanged from its last projection at $28.90, while ABN Amro dropped its target price from $29.17 to $28.55.

ABN Amro said the key risk for BHP in the next few months were falls in base metals prices, while upside risk would come from a faster than expected turnaround in Chinese industrial growth.

BHP’s shares were last traded at $32.35, down 23c this morning.