BHP Group Ltd (ASX: BHP) shares are slipping today.
Shares in the S&P/ASX 200 Index (ASX: XJO) iron ore miner closed yesterday trading for $44.01. In late morning trade on Wednesday, shares are changing hands for $43.33 apiece, down 1.6%.
For some context, the ASX 200 is down 0.3% at this same time.
As the chart above shows, BHP shares are down 14% this year despite a strong recovery from the early September lows.
Today's underperformance looks to be driven by a 1.1% dip in the iron ore price to US$106.40 per tonne.
That's up more than 18% from the US$90 per tonne the industrial metal was fetching in the third week of September. Though its well down from the US$114 per tonne reached earlier this month as investors awaited further Chinese stimulus announcements.
With this in mind, here's why today's retrace could offer an opportune long-term entry point.
Why this fund manager is bullish on BHP shares
BW Equities' Tom Bleakley has an optimistic outlook for the ASX 200 mining giant, with a buy rating on its shares (courtesy of The Bull).
"The global miner has strong exposure to copper and iron ore," Bleakley noted.
"Although BHP's share price has risen since late September, there is sufficient room for more upside as at October 10," he said.
With BHP shares currently down 1% since 10 October, that upside should still be well in play.
The first reason Bleakley is bullish is BHP's copper exposure. Copper is BHP's second biggest revenue earner, and the miner is actively seeking to increase its exposure.
"We're forecasting increasing demand for copper to lead to a supply deficit out to 2030," Bleakley said.
In FY 2024, BHP reported copper production of 1.87 million tonnes, up 9% from the prior year.
The miner received an average realised price of US$3.98 per pound, also up 9% from FY 2023. This led to a 29% year on year increase in underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) from its copper operations. This came in at US$8.6 billion.
Which brings us to the second reason to buy BHP shares today.
"BHP is a relatively low cost iron ore producer," Bleakley said.
In FY 2024, BHP produced 260 million tonnes of the steel-making metal. The miner sold this for an average realised price of US$101.04 per wet metric tonne, up 9% year on year. Underlying EBITDA from iron ore came in at US$18.9 billion, up 13% from FY 2023.
And Bleakley points to potential upside in the iron ore price, which is a third reason to buy BHP shares today.
"Any sustained stimulus from China and an emerging India should, in turn, support iron ore prices moving forward," he said.
Indeed, as we've seen over the past few weeks, China is rolling out new stimulus measures to spur its struggling economy.
While the most recent stimulus announcement underwhelmed expectations, more growth-boosting measures could well be in the pipeline for the world's second-largest economy.
