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

a sad looking engineer or miner wearing a high visibility jacket and a hard hat stands alone with his head bowed and hand to his forehead as he speaks on a mobile telephone out front of what appears to be an on site work shed.
Resources Shares

Down 14% in 2024, why is the BHP share price sliding again today?

ASX 200 investors are bidding down the BHP share price on Wednesday.

Read more »

A mining employee in a white hard hat cheers with fists pumped as the Hot Chili share price rises higher today
Resources Shares

These ASX 200 mining stocks could rise 40% to 50%

Analysts think these miners are dirt cheap at current levels.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Fortescue share price leaps 5% as electric machinery makes a milestone

Fortescue is charging ahead with its electric mining ambitions.

Read more »

rising mining asx share price represented by happy woman miner in hard hat
Resources Shares

Why the BHP share price crushed the benchmark this week

BHP shareholders enjoyed a rewarding week.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Dividend Investing

Here is the profit forecast to 2026 for BHP shares

Let’s unearth how much profit this miner could make.

Read more »

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

Is the worst of the selling now over for ASX iron ore shares?

ASX iron ore giants like BHP, Rio Tinto and Fortescue rebounded this week after falling hard in 2024.

Read more »

Three satisfied miners with their arms crossed looking at the camera proudly
Resources Shares

Why are ASX 200 mining shares smashing the benchmark on Wednesday?

Rio Tinto, BHP and Fortescue shares are all charging higher today.

Read more »

Two miners standing together.
Resources Shares

Why is the South32 share price getting battered today?

ASX 200 investors are bidding down South32 shares today.

Read more »