Over the last couple of weeks the BHP Group Ltd (ASX: BHP) share price has been falling and it has continued that downward trend further today. The resources stock is down 2% at the time of writing.
Since 10 May 2021, BHP shares have fallen by almost 10%. Considering the ASX market capitalisation of BHP is currently approximately $140 billion, a 10% drop is a hefty drop in dollar terms.
What is the latest news?
In the shorter-term, investors pay attention to BHP’s quarterly production numbers and the changing commodity prices.
Iron ore is the biggest profit generator right now. Whilst the iron ore price is a bit lower than the last week or two, it’s still above US$200 per metric tonne which is almost the highest it has been over the last five years.
A few weeks ago the business revealed how it performed in the performed in the three-month period to 31 March 2021.
Petroleum production was up 7% to 25.4 million barrels of oil equivalent (MMboe). Higher volumes reflect the increased Shenzi working interest (after completion in November 2020) and the impacts of Hurricanes Delta and Zeta in the Gulf of Mexico in the prior quarter.
Copper production was down 9%. Lower volumes were primarily a result of decreased throughput at Escondida, reflecting the impact of a reduced operational workforce due to the continuation of COVID-19 restrictions and lower concentrator feed grade.
Iron ore production was down 4% to 59.9 Mt. Lower volumes at Western Australia iron ore (WAIO) reflects weather impacts and planned ore handling plant and stacker maintenance at Newman, partially offset by improved car dumper performance.
Metallurgical coal saw production rise 1%. Queensland coal volumes were in line with the prior quarter as operations continue to be impacted by wet weather events.
Energy coal saw a large 34% increase in production thanks to higher volumes at Cerrejon as a result of a strike in the prior period, partially offset by lower volumes at New South Wales energy coal (NSWEC) with significant wet weather impacts and increased washed coal in response to reduced port capacity following damage to a shiploader at the Newcastle port.
Nickel saw production volumes fall 15% as a result of planned maintenance undertaken at the Kwinana refinery.
Is the lower BHP share price an opportunity?
BHP itself is looking to growth opportunities to help continue the strong performance it is experiencing.
The CEO of BHP, Mike Henry, said:
We are reliably executing our major projects, bringing on new supply in copper, petroleum and iron ore. The Spence Growth Option and Samarco are ramping up and West Barracouta, in petroleum, started production this morning. First production from petroleum’s ruby project is expected in the coming weeks and South Flank, with its higher grade and lump proportion, is on track to begin production in the middle of the year.
The brokers at Macquarie Group Ltd (ASX: MQG) are still confident about BHP shares. It noted that BHP said last week that the ASX miner will soon announce first production at the 80 million per annum South Flank iron ore project. Macquarie is expecting very strong profit in the FY21 second half. The broker has a price target on the BHP share price of $57 over the next 12 months. That suggests a possible upside of around 20%.