Today marks the ninth consecutive day in the red for mining heavyweight BHP Billiton Limited (ASX: BHP), which is once again acting as a drag on the overall sharemarket. The shares are trading 1.3% lower at $29.82 which is more than 13% below their recent high.
So What: While BHP Billiton's diversification can help to offset weakness experienced in any one business line, it doesn't have the same effect when all of the four major commodities it mines are crumbling in price. Iron ore and oil, which are the miner's two most important commodities, have crashed in price over the last 12 months and both look set to continue falling over the course of 2015.
Iron ore managed to recover some of its recent losses overnight, but remains near a six-year low, while Brent oil fell almost 1% to US$57 a barrel. Meanwhile, coal is also hovering near a multi-year low and copper prices have retreated to a two-week low as a result of slowing Chinese growth.
Now What: Given its low cost operations, BHP Billiton is in a far better position than most miners to weather the storm. However, that's not to say it won't be impacted by the commodities crisis, far from it. The miner recently reported a huge decline in earnings for its first half, while its cash flows are also being squeezed.
If commodity prices do continue to decline over the course of 2015, as they are expected to, BHP Billiton's shares could fall significantly further, making the stock one to avoid for now.
