BHP Group Ltd (ASX: BHP) shares are down 1.8% in early afternoon trade today.
Shares in the S&P/ASX 200 Index (ASX: XJO) iron ore miner closed yesterday trading for $44. Shares are currently changing hands for $43.22 apiece.
The 1.8% decline in BHP shares is significantly more than the 0.2% fall posted by the ASX 200 at this same time.
But the 1.5% drop in the S&P/ASX 200 Resource Index (ASX: XJR) gives us some clue of why Australia's biggest miner is coming under selling pressure today.
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What's happening with the iron ore price?
BHP shares, as you'd expect, are very sensitive to the price of iron ore, the miner's biggest revenue earner.
And iron ore continued its slide, tumbling 5.2% overnight to trade for US$97.90 per tonne.
That's the lowest price for the industrial metal since mid-November. And it was only on 15 March that iron ore was trading for just US$134.04 per tonne.
Adding to the pressure on BHP shares today, copper (the miner's number two revenue earner) also dropped 3.7% overnight to US$8,163.50 per tonne. That puts the copper price down 10% since mid-March.
Both metals have come under pressure amid lower demand from China's factories, as the nation's vaunted reopening isn't going quite to plan.
That's precisely what Citi analyst Wenyu Yao cautioned late in April when Citi forecast the iron ore price could test US$90 per tonne before finding support.
"We have been cautious on China's steel demand and iron ore amid an uneven economic recovery and heightened policy risk, though things have unravelled sooner than our base case," she said.
"We see potential risk for further downside below US$100 a tonne if steel demand fails to show meaningful improvement," Yao added.
Indeed, as witnessed by the slump in BHP shares today, that further downside risk looks to be eventuating.
How have BHP shares been performing longer-term?
BHP shares have seen some big price swings alongside the iron ore and copper prices.
Over the past year, the ASX 200 miner is down 3.8%. But investors who snapped up shares at the recent lows on 7 September will be sitting on a gain of 19.2%.
