What: The pain has continued for shareholders of BHP Billiton Limited (ASX: BHP) today after the miner's shares dropped to a fresh 52-week low. Earlier in the session, they plunged 2.6% to just $32.36, before recovering marginally to be trading at $32.62.
The stock has now dropped a remarkable 18.6% since late August.
So What: It couldn't be any clearer how cautious investors are becoming of the plummeting iron ore price. Now sitting at US$80 a tonne, the commodity is hovering around its lowest point in five years.
To make matters worse, BHP Billiton confirmed that it would be ramping up its production levels over the coming years in an attempt to become the world's cheapest producer. While such a move could pay off in the long-run, investors are wary that such an approach will apply additional pressure to the iron ore price. In addition, if the future for iron ore isn't as strong as BHP's CEO Andrew Mackenzie seems to think it will be, BHP could find itself in an extremely vulnerable position.
Now What: Although BHP's shares are now sitting at their lowest level since July 2013, I believe prospective investors should continue to remain on the sidelines, at least until the high level of volatility in the sector begins to subside.
