Here's why the BHP (ASX:BHP) share price is rebounding in 2022

BHP shares have been on the move in 2022…

| More on:
A mining worker wearing a hard hat, orange high vis vest and blue long-sleeved shirt raises his fists in celebration with an excited expression on his face

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

Key Points

  • BHP shares have climbed almost 10% this year following an uptick in iron ore prices
  • Broader market index is also surging ahead on the back of positive investor sentiment
  • The company's H1 FY22 results are scheduled to be released on 15 February

The BHP Group Ltd (ASX: BHP) share price has been marching upwards in 2022.

At Wednesday's market close, shares in the world's second largest miner finished the day 1.58% higher to $45.64. This means that BHP shares have now gained 9.98% since the start of the year.

What's driving BHP shares higher?

There are a few factors as to why the BHP share price is trading in positive territory this year.

Firstly, the accent of iron ore prices is providing a strong support base for the company's margins thus far in FY22. Regarded as a key commodity in BHP's portfolio, this is particularly important given that a majority of its revenues come from the steelmaking ingredient.

In the financial year ending 30 June 2021, iron ore accounted for 57% of the total group revenue from BHP.

Investors will be keeping a close eye as the company gears up to release its half-year results on 15 February.

In addition, the S&P/ASX 200 Resources (ASX: XJR) index has also pushed ahead, gaining almost 4% in 2022. The sector represents 48 of the largest companies in the S&P/ASX 200 that are members in the energy, metals and mining industry.

A positive shift in investment sentiment toward the index has propelled BHP shares forward.

Lastly, stock markets around the world have regained composure following hope that military tensions between Russia and Ukraine can be resolved. Furthermore, the steady decline of Omicron cases has signalled that the pandemic is nearing an end.

Analysts at UBS updated their outlook on BHP shares yesterday. The broker raised the 12-month price target by 14% to $42 apiece. While this may be slightly lower than the current share price, UBS believes BHP shares are now fully valued.

BHP share price summary

Despite a positive gain of 10% in 2022, the BHP share price is relatively flat over the last 12 months.

Investors heavily sold off the company's shares in August after reaching an all-time high of $54.55. Since then, its shares hit a 52-week low of $35.56, before surging to late August levels of around the $45 mark.

Based on today's price, BHP presides a market capitalisation of roughly $231.04 billion and has approximately 5.06 billion shares outstanding.

Motley Fool contributor Aaron Teboneras 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

Female miner smiling at a mine site.
Resources Shares

Up 60% this year, this ASX 200 mining stock just smashed production records

Production surge headlines quarterly results.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Resources Shares

After lifting its price target, Macquarie now expects 36% upside from this ASX mining stock

The precious metals producer released better-than-expected production guidance.

Read more »

A miner in a hardhat and high visibility clothing makes a thumbs up symbol.
Resources Shares

4 reasons to buy Rio Tinto shares today

A leading expert forecasts strong growth potential for Rio Tinto shares.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Why Macquarie expects this ASX All Ords copper stock could surge 38%

With costs coming in below expectations, this ASX All Ords copper stock could rocket higher over the coming months.

Read more »

Iron ore price Vale dam collapse ASX shares iron ore, iron ore australia, iron ore price, commodity price,
Resources Shares

Major miners up as China announces new mega project

Can a new mega-dam absorb iron ore oversupply?

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
Broker Notes

Leading broker has just downgraded BHP shares. Is it time to sell?

Macquarie sees little upside. But why?

Read more »

A young woman wearing a blue blouse with white polkadots holds her phone up with an intrigued and happy look on her face as she reads some news.
Resources Shares

3 reasons why the BHP share price could be a buy

Here are my optimistic thoughts on BHP.

Read more »

mining asx shares represented by miner writing report on clipboard
Resources Shares

This ASX 200 miner is ramping up copper output as prices reach all-time highs

Copper production leads quarterly update.

Read more »