Why is the BHP share price getting hammered on Tuesday?

ASX 200 investors are bidding down the BHP share price on Tuesday.

| More on:
An engineer takes a break on a staircase and looks out over a huge open pit coal mine as the sun rises in the background.

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 is taking a beating today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed down 2.6% yesterday at $42.82. In late morning trade on Tuesday, shares are swapping hands for $42.43, down 0.9%.

For some context, the ASX 200 is up 0.4% at this same time.

Here's what's going on.

What's pressuring the BHP share price?

Most of the headwinds battering the BHP share price today stem from a big overnight fall in the iron ore price.

Iron ore counts as BHP's top revenue earner. And the price of the critical steel-making metal tumbled 6.8% overnight to trade for US$107.35 per tonne. That's down from US$145 per tonne in early January, and well below many analyst forecasts that predicted iron ore would hold above US$120 per tonne for the first half of 2024.

That looks to be because China's floundering economy has thus far failed to reignite. And the Chinese government's stimulus efforts to date have been on the decidedly timid side of the spectrum.

China is Australia's top import market for iron ore and many basic commodities. And its often booming real estate sector consumes mind-boggling quantities of steel. But the property markets in China have been weak, with iron ore stockpiles building.

And the outlook remains cloudy, which sees both iron ore and the BHP share price taking a big hit this week.

Commenting on the headwinds facing the industry, Daniel Hynes, a senior commodity strategist at ANZ Group Holdings Ltd (ASX: ANZ) said (quoted by The Australian Financial Review), "China's latest National People's Congress meeting didn't ease prospects for the property market and a weak start to the construction season is boding ill for steel demand."

Tom Price, senior commodities analyst at Liberum added:

It's hard to build a bullish case for iron ore over any time horizon at the moment. There's probably a speculative element at work today, with investors looking at what it will take for China to hit its growth targets for the year and deciding that it's just not going to happen.

With doubts about China's 2024 growth prospects simmering, the BHP share price could be entering bargain territory if the Chinese economy regains traction.

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

A man wearing a hard hat and high visibility vest looks out over a vast plain.
Resources Shares

Can a new leadership team turn Mineral Resources around?

Down 50% in a year, is the Mineral Resources share price primed for recovery?

Read more »

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

Up 29% in a year, are Lynas shares still a good buy today?

A leading expert delivers his verdict on the outlook for Lynas shares.

Read more »

Miner and company person analysing results of a mining company.
Resources Shares

BHP share price tumbles amid $66 million legal hit

ASX investors are bidding down the BHP share price today. Here’s what’s happening.

Read more »

Three miners looking at a tablet.
Resources Shares

Here's the BHP dividend forecast from top analysts through to 2029

How big could the dividends be in the coming years?

Read more »

Female miner smiling in front of a mining vehicle as the Pilbara Minerals share price rises
Resources Shares

Forget BHP and CBA shares and buy these 4 promising ASX All Ords stocks instead

A leading fund manager expects these quality ASX All Ords stocks will outperform CBA and BHP into 2026.

Read more »

Man pointing at a blue rising share price graph.
Resources Shares

Up 275% in a year, why this ASX All Ords mining stock could keep racing higher into 2026

A leading fund manager forecasts more outperformance to come for this rocketing ASX All Ords miner. But why?

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Why is the BHP share price smashing the benchmark today?

BHP, Rio Tinto, and Fortescue shares are all racing ahead of the ASX 200 on Thursday. But why?

Read more »

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Share Market News

Broker tips big upside for these ASX materials shares

Two materials companies have earned a recommendation from this broker. 

Read more »