Why is the BHP share price racing ahead of the ASX 200 today?

Iron ore is BHP's biggest revenue earner with copper coming in at number two.

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Three male athletes sprint on an athletics track with the sun low on the horizon behind them representing the race between ASX lithium shares to outperform

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Key points

  • The BHP share price is up 2.5%
  • Iron ore and copper prices gained on rumours that China may wind down its COVID-zero policies early next year
  • BHP’s NYSE listed stock closed up 3.7% overnight

The BHP Group Ltd (ASX: BHP) share price is setting the pace today, up 2.6% in late morning trade.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday trading for $38.42 and are currently swapping hands for $39.42 apiece.

The ASX 200 is in the green as well, though up a more modest 0.3%.

So why is the BHP share price outperforming?

What's the latest out of China?

The BHP share price on the ASX is following in the footsteps of the miner's US-listed stock. BHP shares closed up 3.7% on the NYSE yesterday (overnight Aussie time).

BHP looks to be getting a boost from rumours circulating on Chinese social media.

Those unconfirmed rumours indicate that the Chinese government may be ready to ditch its COVID-zero policies and reopen the world's number two economy by March. China's continuing lockdowns have hampered its growth and diminished its voracious demand for industrial metals.

Atop sending many Chinse stocks higher, the rumours also fuelled some gains in iron ore and copper.

Iron ore is up 0.8% overnight to US$80.15 per tonne, while copper gained 2.7% to US$7,652 per tonne.

That's good news for the BHP share price, as iron ore is the miner's biggest revenue earner with copper coming in at number two.

As for what's happening with China's COVID policies, Charlie Wilson, a portfolio manager at Thornburg Investment Management, said (courtesy of Bloomberg), "I'm not surprised to hear rumours about a more formal approach. It's impossible to run an economy of that size with periodically locking down. It's not sustainable."

Commenting on the rally in stocks and commodity prices, Sharif Farha, head of investments at HB Investments added, "Whether the rally sustains or not will be dependent on if China's Covid Zero policy is officially over."

BHP share price snapshot

Though it's taken a big tumble since April amid a sharp retrace in iron ore and copper prices, the BHP share price remains up 10% over the past 12 months. That compares to a 4% full-year loss posted by the ASX 200.

Motley Fool contributor Bernd Struben 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 Scott Phillips.

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