The BHP Billiton Limited (ASX: BHP) share price was dumped 3% on Wednesday, continuing its recent falls.
BHP share price
In just one month, more than $10 billion has been wiped from BHP's market value.
Why?
At the end of April, 'The Big Australian' released its operational report which showed a fall-off in production in its petroleum and copper businesses. However, that likely doesn't explain the company's recent falls.
Looking further afield, it's easy to see that the issues crippling its share price most likely stem from falling commodity prices.
In May, here's how the prices of BHP's key commodities moved:
- Iron ore – down 13%
- Copper – down 1.5%
- WTI Crude – down 5%
- Thermal Coal – down 11%
Oil, which accounts for a huge chunk of BHP's business, has continued to fall since May. It's fallen from $US48.36 to just $US42.62 per barrel, according to Bloomberg. In other words, it's down a further 12%.
Foolish Takeaway
You won't find BHP or Rio Tinto Limited (ASX: RIO) shares in my portfolio because I have no way to assess the state of global commodity markets. And if I cannot do that, I have no investing edge when I'm evaluating a global mining business.
While the company has significant advantages over its peers, including a huge resource base and low costs, I'm looking for other investment candidates.
