The BHP Group Ltd (ASX: BHP) share price is in the green this month, but what is ahead?
BHP shares have jumped 5% since the market close on 9 September and are currently trading at $40.03. For perspective, the S&P/ASX 200 Index (ASX: XJO) has fallen more than 3% in the same time frame.
Let's take a look at the outlook for BHP.
What's ahead for the iron ore price?
BHP is a diversified Australian mining giant, and iron ore contributed to more than 50% of the company's earnings in FY22.
The company also mines copper, coal, potash, uranium, gold, silver, nickel and other commodities.
However, ANZ strategists are bearish on the outlook for the iron ore price heading into 2023.
In a recent research report, ANZ commodity strategists Daniel Hynes and Soni Kumari said,
We see prices at the end of 2023 sitting under USD100/t as the market tightness eases.
Explaining this outlook, the strategists highlighted "bleak economic growth" and the Chinese property market. They said:
Europe's energy crisis and winter curbs in China leave little room for any recovery in steel production in Q4 2022.
Global steel production is estimated to contract by nearly 5% y/y this year.
Narrowing profit margins would also keep production subdued. Therefore, we expect prices to trend lower in Q4 and into 2023 as the impact of China's stimulus measures peter out and iron ore demand weakens.
Iron ore is currently fetching US$98 a tonne, trading economics data shows.
BHP's total earnings for FY22 were US$40.6 billion. Of this, more than half was derived from iron ore at 21.7 billion.
Share price snapshot
The BHP share price has gained 19% in the past year, while it has climbed 8% year to date.
In comparison, the ASX 200 has lost nearly 9% in the past year.
BHP has a market capitalisation of around $203 billion based on the current share price.
