BHP (ASX:BHP) share price lifts as iron ore prices rebound on Monday

What’s pushing BHP higher this morning?

| More on:
A boy bounds after a big colourful bouncing ball in a grassy field.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 Index (ASX: XJO) has had a promising start to this week’s trading so far on Monday morning. At the time of writing, the ASX 200 is up a healthy 0.67% at 7,465 points. The BHP Group Ltd (ASX: BHP) share price has joined in this optimism this morning. BHP shares are currently up by 1.3% at $38.14 a share. So what’s pushing up BHP shares this Monday? Could the iron ore price be responsible?

Currently the ASX 200’s second-largest constituent by market capitalisation, BHP is the largest mining company in the country and one of the largest in the world. However, BHP shares are still primarily influenced by the market fluctuations of its most important commodity: iron ore.

What’s going on with the iron ore price?

BHP’s recent run to a new record high was indeed driven by an unprecedented boom in iron ore pricing. It was only a few months ago that the iron ore price was above US$200 a tonne, a historically sky-high level. This, together with record dividend payments, helped push BHP shares from the $43 a share level we saw at the start of the year to an all-time high of $54.55 by August. That’s a rise of more than 26%.

However, more recently, iron ore has been acting as a handbrake on BHP shares. Since reaching those new highs in early August, BHP shares have plummeted. The company is now around 30% off of those all-time highs as it stands today. Indeed, at the current BHP share price, the company is now down 11.4% in 2021 so far.

So that brings us back to the current iron ore price. What’s been going on with this most important commodity?

Well, iron ore is still well below the levels we saw only a few months ago. Saying that, it’s still had a pretty decent time over the past week or so. As my Fool colleague James covered this morning, benchmark iron ore prices rose 2.2% to US$119.52 a tonne on Friday night. Perhaps with this rise, investors are hopeful the worst of the iron ore price falls are behind BHP. At least for now.

Could BHP shares be a buy today?

As the Fool covered last week, broker Morgans is bullish on BHP shares at their current level. Morgans rated BHP as an add, with a 12-month share price target of $46.05 a share for the miner. That implies a potential future upside of close to 22% on current levels. Morgans reckons BHP has been oversold by investors, and is eyeing a “double-digit dividend yield” from BHP shares over the current financial year (FY2022).

At BHP’s current share price, this iron ore giant has a market capitalisation of $111.08 billion and a dividend yield of 10.62%.

Motley Fool contributor Sebastian Bowen 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.

More on Resources Shares

Two excited mining workers in yellow high vis vests and hardhats shake hands to congratulate each other on a mineral discovery
Resources Shares

Worried about the iron ore price? Why the need for it ‘ain’t going anywhere’: broker

The iron ore price has slipped from about US$160 per tonne in March to just above US$100 per tonne today.

Read more »

Miner on his tablet next to a mine site.
Resources Shares

Global Lithium shares edged higher today amid ‘very promising’ results

What did Global Lithium announce to the market?

Read more »

A white EV car and an electric vehicle pump with green highlighted swirls representing ASX lithium shares
Resources Shares

Why is the Sayona Mining share price surging 8% on Friday?

The Federal Government is talking up the need for electric vehicles in Australia today.

Read more »

Two Firefinch miners dressed in hard hats and high vis gear standing at an outdoor mining site discussing a mineral find with one holding a rock and the other looking at at his ipad
Resources Shares

Could Porsche’s new test run threaten the outlook for ASX lithium shares?

Lithium miners and explorers have benefited from soaring lithium prices.

Read more »

A young woman looks at something on her laptop, wondering what will come next.
Resources Shares

Why did the Lake Resources share price pop and then stop on Friday?

The clean lithium developer soared 8% this morning before partially retreating. Here are the details.

Read more »

A green bubble or balloon bursts on a man's face.
Resources Shares

1 factor that could drag on Fortescue Future Industries’ green dream

There’s a major factor that could impact how well FFI can do.

Read more »

A boy is about to rocket from a copper-coloured field of hay into the sky.
Resources Shares

Guess which ASX copper share has exploded 182% this week?

This ASX copper share has risen 182% since last week alone...

Read more »

tradie holding a laptop computer displaying ASX share price and scratching his head looking confused
Broker Notes

Are Rio Tinto shares a buy? See what top brokers are saying

The miner's share price has struggled to make ground in recent months.

Read more »