LONDON – BHP Billiton, the world's largest miner, sounded a note of caution on Thursday in the face of short-term market volatility, warning of softening prices and increasingly cautious customers.

"Our order book remains full, and the developing world industrial operating rates are healthy. We have, however, seen a softening of prices over the last months," CE Marius Kloppers told shareholders at the group's London annual general meeting.

"We are also seeing that customers are looking closely at their inventory levels as they operate their businesses, cognisant of the potential need to tailor their plans if the global economic uncertainty continues."

The big diversified miners have posted bullish production data for the September quarter, with BHP this week showing its foot was firmly on the accelerator on key commodities such as iron ore, despite falling prices.

They have also indicated demand is holding up, even in the face of falling equity and commodity prices and volatility in the markets as investors fret over Europe's sovereign debt.

But major players including Rio Tinto have also warned of signs of nervousness among customers, with Rio saying last month that it was seeing some clients asking to delay shipments of metals.

BHP said Europe would continue to feel the impact of high levels of debt and would, along with the United States, experience a "protracted" recovery.

But it remained confident in demand from countries that drive its business, including China and India, with the economies there growing "solidly and sustainably".

"The future long-term demand for our products will remain strong," Kloppers said, emphasising faltering global supply of iron ore, coal and copper.

BHP faced questions from shareholders over plans for surplus cash, but the group, which has completed a $10-billion buyback, said it had "very attractive opportunities".

The group, along with its peers, has huge capital expenditure plans to boost production. It expects to spend $80-billion in growth projects over the five years to 2015.

Last week BHP approved $1.2-billion dollars of spending for the first phase of the expansion of the Olympic Dam uranium and copper mine, one of the most significant development projects in the region.

It has also made acquisitions in the past year, including to expand its presence in shale gas, with the $12.1-billion acquisition of Petrohawk Energy in July.

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