Why did the BHP share price get hammered on Tuesday?

Iron ore shares struggled on the ASX today. Here's what happened.

| More on:

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

Key points
  • The BHP share price finished today in the red 
  • Rio Tinto and Fortescue shares also fell on a disappointing day for the materials sector
  • This followed a drop in iron ore prices overnight 

The BHP Group Ltd (ASX: BHP) share price had a tough day on the market today.

BHP shares fell 1.52% to close at $46.08. For perspective, the S&P/ASX 200 Index (ASX: XJO) climbed 0.31% today.

Let's take a look at what impacted the BHP share price today.

A young man sits on the floor with his back against a sofa hunched over his phone in one hand and his other hand on top of his head as though he is seeing bad news as his face looks sad and anguished.

Image source: Getty Images

What's going on?

BHP is not the only ASX iron ore share that struggled today. The Fortescue Metals Group Limited (ASX: FMG) share price slid 4.21% today, while Rio Tinto Ltd (ASX: RIO) shares dropped 1.93%.

The S&P/ASX 200 Materials Index (ASX: XMJ) slid 1.4%, making it the worst-performing sector on the market.

BHP, Rio, and Fortescue are all among the top iron ore producers in the world.

Iron ore futures on the Singapore Exchange is down 2.28% to US$106.90 at last look.

The share price of the largest iron ore producer in the world, Vale SA (NYSE: VALE), also dropped 4.19% on the New York Stock Exchange overnight.

Navigate Commodities managing director Atilla Widnell said iron ore at more than $100 a tonne seems "overvalued" currently. In quotes cited by Hellenic Shipping News, Widnell added:

The longer prices persist above this level there's an increasing likelihood the pricing-floor may start to move higher.

Iron ore futures rallying to close at $111.75/t on Friday is yet another poignant example of just how much heat and overly positive sentiment is currently built in to the current pricing structure.

Macquarie analysts have recently retained an outperform rating on BHP shares with a $50 price target. The team lifted their price target to reflect higher-than-expected iron ore prices.

BHP share price snapshot

The BHP share price has risen 26% in the last year, as shown in the graph below. It is also up by more than 9% in the past month.

BHP has a market capitalisation of about $233 billion.

Motley Fool contributor Monica O'Shea 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 recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

A woman stands in a field and raises her arms to welcome a golden sunset.
Materials Shares

Top broker tips 70%+ upside for this ASX materials stock after exceptional results

This gold miner is tipped to explode.

Read more »

a woman wearing a sparkly strapless dress leans on a neat stack of six gold bars as she smiles and looks to the side as though she is very happy and protective of her stash. She also has gold fingernails and gold glitter pieces affixed to her cheeks.
Materials Shares

What's Core Lithium's big news today?

Lithium is not the focus of today's announcement.

Read more »

A woman in high visibility clothing and a hard hat stands in front of an aluminium smelter.
Share Fallers

Why this ASX 200 stock is crashing after doubling in a year

Alcoa shares are down 20% in a week. What's changed?

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin, waiting in anticipation.
Materials Shares

James Hardie shares rebound 26% from a dip last month: Buy, sell or hold?

Find out what analysts tip for James Hardie shares next.

Read more »

A man checks his phone next to an electric vehicle charging station with his electric vehicle parked in the charging bay.
Materials Shares

Guess the ASX lithium stock racing higher on big news

This lithium miner has made an announcement. Here's what you need to know.

Read more »

Five factory workers and professionals standing and smiling.
Materials Shares

This ASX materials stock has 74% upside according to Bell Potter

This is a big upside stock to add to your watchlist.

Read more »

A judge sitting in a blurred background reaches forward to strike his gavel on the strikeplate on his judge's bench.
Materials Shares

James Hardie shares sink as investors face another setback

James Hardie’s rough year has taken another uncomfortable turn.

Read more »

Two young African mine workers wearing protective wear are discussing coal quality while on site at a coal mine.
Materials Shares

With 46% potential upside, this ASX materials stock is a compelling buy

There are promising tailwinds from a recent feasibility study for this company.

Read more »