Why are BHP shares sliding today?

It's not just BHP shares in decline today. The S&P/ASX 200 Resource Index (ASX: XJR) is down 1.5%.

| More on:
asx iron ore share price crash represented by meteor speeding through space

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 share are down 1.8% in afternoon trade
  • The ASX 200 miner is under pressure amid a big overnight fall in iron ore and copper prices
  • Weak demand out of China is denting the near-term outlook for industrial metals

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.

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%.

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.

More on Resources Shares

Miner looking at a tablet.
Resources Shares

What does Trump's win mean for iron ore shares like Fortescue?

The controversy on tariffs has already started.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

Own BHP shares? Directors of the mining giant have been busy with stock transactions

It can be worrying when directors sell.

Read more »

Buy, hold and sell ratings written on signs on a wooden pole.
Resources Shares

Are Lynas shares a buy, sell, or hold for 2025?

Much depends on the outlook for rare earths.

Read more »

a tired and sad looking bulldog sits at an office desk with a pen an paper on it and a cup of coffee with his head resting on the desk as he gives a mournful look to the camera.
Resources Shares

After crashing 50%, could this ASX All Ords stock rebound?

Such low starting valuations could help.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Resources Shares

Why did the Fortescue share price fall 7% in October?

Let's review what happened with the ASX 200 mining giant in October.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Resources Shares

Why did the BHP share price get hammered in October?

ASX 200 investors sent BHP shares sharply lower in October. But why?

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Resources Shares

Gina Rinehart's empire raked in another $5.6 billion. Here's how

Resources and mining continue to dominate the Australian market.

Read more »

two men in business suits sit across from each other at a table with a chess board on it. Both hold their hands to their chins and look down in serious contemplation of their next move.
Resources Shares

'Not ruled out': Could BHP still buy Anglo-American?

This mega-deal might not be as dead as it looks.

Read more »