After a strong performance through most of 2022, BHP Group Ltd (ASX: BHP) has had a bit of a tough run over the past 2 weeks.
At market open this morning, the BHP share price is down 10% from Tuesday, 19 April, having closed yesterday at $47.98.
The other S&P/ASX 200 Index (ASX: XJO) mining giants have struggled over the past 10 trading days as well, though not quite as much.
The Rio Tinto Limited (ASX: RIO) share price, for example, is down 7.3% over the 2 weeks while Fortescue Metals Group Limited (ASX: FMG) shares have dropped a more modest 1.7%.
A common headwind hitting BHP shares along with Rio Tinto and Fortescue has been the slipping iron ore price, with fears that Chinese demand for the industrial metal could fall amid its reduced economic growth outlook.
Last week, iron ore fell 8.5% before regaining 5.4% over the past few days.
And according to Jess Amir, Australian market strategist at Saxo Bank, demand for iron ore looks set to rebound, which should help support the recovery in the BHP share price and the other top ASX 200 iron ore stocks.
Image source: Getty Images
World's top 2 economies to splash cash on infrastructure
Iron ore is a key ingredient in steel production. And steel, in turn, is vital in the construction of buildings, bridges, roads, and most every type of infrastructure project.
Hence, when the world's 2 biggest economies are planning major ramp ups in infrastructure spending, demand for iron ore should increase.
According to Amir:
Iron ore buying is expected to ramp up not only because of Chinese President Xi's calls for 'all-out efforts' to boost infrastructure construction like it did in 2007-2008, but also as US President Biden's $1.2 trillion infrastructure bill will be put to work.
Turning to the slumping BHP share price and the recent declines in Fortescue and Rio Tinto, Amir said, "This supports recoveries in BHP, Fortescue, and Rio still trading lower than 2-week highs."
Amir also points to the juicy dividend yields offered by the ASX 200 miners, alongside their modest price to earnings (P/E) levels:
These three stocks offer the highest dividend yields in the market, and are far above the average 2.8% yield.
BHP has a yield of 10%, Rio Tinto 9.6%, and Fortescue 13.7%. BHP trades on 10.68 times earnings, Rio on 6.09 times earnings and Fortescue on 5.2 times earnings. And they all have free-cash flows, unlike most growth and tech stocks.
BHP share price snapshot
Although the miner has lost ground over the past 2 weeks, the BHP share price remains up 12.8% so far in 2022. That compares to a year-to-date loss of 3.5% posted by the ASX 200.
