Here's why BHP Billiton Limited shares are on the nose today

BHP Billiton Limited (ASX: BHP), Rio Tinto Limited (ASX:RIO) and other iron ore miners have been feeling the pressure recently.

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The Australian shares of mining heavyweight BHP Billiton Limited (ASX: BHP) continued their plunge today with the stock having fallen 45 cents or 1.2%. Now trading at $37.35, shares have fallen more than 6% since last Tuesday prior to the release of BHP's full-year earnings results.

The miner's fall today could likely be attributed to the sharp fall in the iron ore price late last week. The commodity dropped 2% to just US$90.10, its lowest price in more than two months, on evidence that China's economic growth has once again slowed. The HSBC flash China manufacturing purchasing managers' index fell to 50.3 in August, down from 51.7 in July.

Supporting this theory, Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) have both dropped 1.1% and 1.7% respectively, while higher-cost producers Atlas Iron Limited (ASX: AGO) and Arrium Limited (ASX: ARI) have plunged 5.6% and 3.7% respectively.

The news comes as all of the major miners have confirmed they will push on with their strategy of ramping-up production rates which will add further pressure to the iron ore price. A number of analysts and financial firms still believe iron ore could fall as low as US$80 a tonne in the near future, which would indicate an 11% downside from today's level.

It should also be noted that weakness in BHP Billiton's share price performance could also be attributed to ongoing investor sentiment regarding its recent demerger announcement.

A better bet than BHP Billiton

Compared to the other miners, BHP Billiton maintains far greater diversification between operations, making it less susceptible to the tumbling iron ore price (although iron ore still generates the largest portion of earnings for the miner). At today's price, BHP could make for a solid addition to a long-term share portfolio, however, its sheer size could limit the capital gains recognised by shareholders over the coming years.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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