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Shares fall as much as 2.4% to hit lowest since April 6

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Q3 Western Australia iron ore output slips on one-day halt

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FY23 iron ore output guidance maintained

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Escondida FY23 copper output view trimmed

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Sees strong demand from customers in China, India

April 21 (Reuters) - BHP Group Ltd posted a marginal drop in quarterly iron ore output from Western Australia on Friday, sending its shares over 2% lower, even as the global miner struck an upbeat tone on commodity outlook on strong demand from top consumer China.

Iron ore prices rose in the March quarter on optimism related to an economic rebound in China, after the country eased some major COVID-19 restrictions in December 2022 and shifted its policy toward its dwindling property sector.

"Recent engagements with customers in China and India have reaffirmed our positive outlook for commodity demand," said BHP Chief Executive Officer Mike Henry.

"China's economic rebound and solid momentum in India's steelmaking growth (are) helping to offset the impact of slowing growth in the U.S., Japan and Europe."

The world's largest listed miner reiterated its annual forecast of 278 million tonnes (Mt) to 290 Mt for Western Australian iron ore output, and said the unit cost for the same was expected at the top end of $18 to $19 per tonne range.

BHP, which is set to assume control of copper miner OZ Minerals from May, maintained its copper output guidance of between 1,635 thousand tonnes (kt) and 1,825 kt, despite trimming output forecast from the Escondida copper project in Chile to between 1,050 kt and 1,080 kt.

For the third quarter ended March 31, the mining giant reported iron ore production of 66.2 Mt from mines it operates in Western Australia, slightly below the 66.7 Mt clocked a year earlier, as it kept its operations closed for a day after a fatality at the site.

Morgan Stanley was expecting quarterly iron ore output of 67.4 Mt.

On Thursday, Rio Tinto Ltd, the world's biggest iron ore producer, reported record first-quarter iron ore shipments from Western Australia, even as it warned of "persistently high" inflation affecting economic activity.

Shares of BHP slipped as much as 2.4% to A$44.94, hitting their lowest since April 6.

(Reporting by Sameer Manekar and Harshita Swaminathan in Bengaluru; Editing by Anil D'Silva and Subhranshu Sahu)