BHP Billiton Limited (ASX: BHP) shares are trading in the red for the sixth consecutive day today as sliding commodity prices continue to weigh on investor sentiment. The stock has now fallen 7.2% since the beginning of last week to trade at $31.83.
So What: The stock's most recent decline can likely be attributed to heavy falls in the price of iron ore. While the commodity has lost almost 60% of its value over the last 15 months, the rate at which it is declining has sped up over the last few days after China forecast growth of just 7% in 2015. According to the Metal Bulletin, iron ore is now fetching just US$58.58 a barrel, down from roughly US$65 recently.
Adding to BHP Billiton's woes is the falling oil price. Oil is the miner's second most important commodity and it too has deteriorated recently. Brent oil is now worth just US$58.56 a barrel after having fallen roughly 2% overnight.
Now What: BHP Billiton has been on my watchlist for a long time. As a low-cost, diversified miner, I see it as being one of the safest ways to gain exposure to Australia's resources sector. In saying that however, I am still not convinced the stock is worth my money.
Despite its cost advantages, BHP Billiton is still exposed to the pressures caused by declining commodity prices which could continue to weigh on the stock's price over the coming months, or even years. As such, it will remain on my watchlist for the time being, while I consider some of the market's other, more compelling opportunities.
