The BHP (ASX:BHP) share price is up 21% in the last 6 months. Is now a good time to buy shares in this ASX 200 giant?

We take a look at what's been driving the BHP share price and whether it will keep climbing.

| More on:
Three shareholders climbing ladders up into the clouds

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The BHP Group Ltd (ASX: BHP) share price hit an all-time high on Friday, reaching $54.55 in intraday trade.

Unfortunately, its gains didn't hold. The ASX 200 iron ore producer's shares ended the week trading for $53.49. That means the BHP share price is currently 21.2% higher than it was 6 months ago.

But is now a good time to buy BHP?

Let's take a look at what's been driving the ASX 200 giant's share price lately and whether it looks like it will keep climbing.

What's driving the BHP share price?

As The Motley Fool Australia reported on Friday, it seems the BHP share price is being driven higher by factors outside the company's control, namely the price of iron ore and the Australian dollar.

Right now, iron ore is coming off its own all-time high. A tonne of iron ore is currently going for US$193.70 a tonne. That's not quite the all-time high of US$238 per tonne that it hit in early May, but it's still above what it has been in recent years.

At the same time, the Australian dollar is at a particularly low point. Right now, AU$1.00 is worth US$0.74. When the Australian dollar is down, Aussie companies trading internationally get more Aussie dollars in their pockets.

So, we now have a fair idea of some of the major factors driving the BHP share price. But the question is, will they stick around?

Iron ore price

In the case of iron ore, the answer is no, according to the Australian Office of the Chief Economist (OCE).

The OCE expects the amount of iron ore that Australia is exporting to increase by 2022/23 as new mines are put into production. At the same time, it forecasts the price of iron ore to ease.

The OCE's guidance for the iron ore price is about $150 per tonne on average for the remainder of 2021. It expects the price to fall below $100 per tonne by the end of 2022.

Australian dollar

Whether the Aussie dollar's value against the US dollar will go up or down is hard to predict, but some experts forecast it will go up.

National Australia Bank Ltd. (ASX:NAB) expects the Australian dollar will be worth US$0.78 by December 2021 and US$0.80 by March 2022. It predicts it will stay at US$0.80 until 2023, then fall again.

Is now a good time to buy BHP shares?

Unfortunately, using just these metrics, it doesn't look like a great time to buy the ASX 200 giant.

However, it's impossible to predict whether the BHP share price will go up or down.

Time will tell how the market treats BHP in the near future, with the most telling answer to come later this month when BHP releases its full-year results on 17 August.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Resources Shares

Which ASX mining shares make it into the passive income elite globally?

Clue: BHP isn't one of them.

Read more »

Mining worker wearing hard hat and high vis vest holds thumbs up and smiles
Resources Shares

2 of the best ASX 200 mining stocks to buy now

These stocks are highly rated by analysts at Bell Potter. Let's see what the broker is saying about them.

Read more »

Miner holding cash which represents dividends.
Resources Shares

Could a maiden dividend soon be on the cards for this ASX mining stock?

Reinvestment in growth projects has been the company's priority up to this point

Read more »

Man in yellow hard hat looks through binoculars as man in white hard hat stands behind him and points.
Resources Shares

Pilbara Minerals shares: What the AGM revealed and what's next

Investors have plenty to digest, from updates on growth projects to the company's evolving strategy.

Read more »

Female miner in hard hat and safety vest on laptop with mining drill in background.
Resources Shares

Why this expert says it's time to sell Lynas shares

Lynas shares have come under heavy selling pressure in recent weeks.

Read more »

Business people standing at a mine site smiling.
Resources Shares

Forget Fortescue shares and buy this miner

A leading broker expects these two mining shares to trade in opposite directions.

Read more »

A mining worker wearing a white hardhat and a high vis vest stands on a platform overlooking a huge mine, thinking about what comes next.
Dividend Investing

BHP shares have fallen out of the global top 20 dividend payers. Here's why

Global dividends continue to climb.

Read more »

Miner standing in front of a vehicle at a mine site.
Resources Shares

Is the worst now over for Mineral Resources shares?

What's next for the miner?

Read more »