The BHP (ASX:BHP) share price is up 8% in the past month. Here’s why

The BHP share price is both tumbling and rallying in recent weeks amid volatility in the broader market.

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Rumble share price A satisfield miner stands in front of a drilling rig, indicating a share price rise in ASX mining companies

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The BHP Group Ltd (ASX: BHP) share price has rallied 8% in the past month, bouncing off a 2-month low of $45.61 on 21 June to trade at $50.19 early Wednesday morning.

Shares in the iron ore major continue to move in a volatile fashion, sliding to short-term lows before quickly bouncing back to all-time highs.

BHP share price tumbles despite upbeat quarterly update

Looking at the recent performance of the iron ore major, the BHP share price has tumbled 5.07% this week after a record close of $51.87 on Friday.

This weakness was overshadowed by a sharp selloff in the broader market, with major indices such as the Dow Jones Industrial Average and S&P/ASX 200 Index (ASX: XJO) sliding a respective 2.99% and 1.31% during Monday and Tuesday trading sessions.

The US market has faltered under increasing concerns of a resurgence in COVID-19 cases and the delta variant.

Despite a disappointing week on the ASX so far, BHP has released its fair share of positive news.

On Tuesday, the company released its fourth-quarter and full-year update, citing production that was in line with guidance and strong pricing for its commodities.

Overall, BHP CEO Mike Henry said the company was “in great shape”.

Our operations are performing well, we continue our track record of disciplined capital allocation, and our portfolio is positively leveraged to the megatrends of decarbonisation, electrification and population growth.

Iron ore prices hold up despite weak outlook

Looking ahead for the BHP share price, there are consensus expectations that iron ore prices will weaken in the medium to long term.

A June quarterly report from the Australian Government’s commodity forecaster, Office of the Chief Economist (OCE) said that:

Prices are forecast to average around US$150 a tonne in 2021, before falling to below US$100 a tonne by the end of 2022, as Brazilian supply recovers and Chinese steel production softens

The last time iron ore was trading at US$100 a tonne was back in June 2020 when BHP shares were fetching around $35 a share.

Despite increasing expectations of moderating prices, iron ore has remained well above the US$200 level.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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