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Why did the BHP share price descend in May?

How did BHP perform in May?

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Monica O'Shea
Monica is a journalist with experience working for Daily Mail Australia in Sydney and the Port Pirie Recorder and the Flinders News in South Australia. Monica completed a journalism cadetship in 2013. She also hold a B.Science (Biotechnology) with Honours from the University of Adelaide. Monica has worked in government at the local, state and federal level. Monica has a keen interest in finance and the share market and enjoys exploring the highs and lows. When not writing for Motley Fool Australia, Monica enjoys travel, sport, music, and likes to play the violin in her spare time.
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Key points
  • BHP shares shed 5% in May
  • Fortescue and Rio Tinto shares also declined
  • Iron ore and copper prices descended on weaker sentiment out of China

The BHP Group Ltd (ASX: BHP) share price shed 5% in the month of May but can it recover?

The mining giant's share price slid from $44.40 at market close on 28 April to $42.02 at 31 May. For perspective, the S&P/ASX 200 Index (ASX: XJO) fell 2.98% in the same time frame.

So what happened to the BHP share price in May?

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price

Image source: Getty Images

What went on?

The BHP share price was not the only ASX 200 mining giant to drop in May. Fortescue Metals Group Ltd (ASX: FMG) shares slid 8%, while Rio Tinto Ltd (ASX: RIO) shares slid nearly 5%.

The iron ore price dropped nearly 5% from US$105 a tonne to US$100 a tonne during the month of May, trading economics data shows. Copper prices also lost 6%.

Iron ore prices fell during the month amid "ongoing concerns of weakening steel demand". Data showed lower industrial output growth and slower fixed asset investment.

ANZ senior economist Daniel Hynes also lowered the price target on iron ore to US$95 a tonne, as my Foolish colleague Bernd reported.

In early May, BHP cleared the final hurdle to acquire 100% of the shares of copper miner Oz Minerals Limited (ASX: OZL).

Commenting on the news, BHP CEO Mike Henry said:

This acquisition strengthens BHP's portfolio in copper and nickel and is in line with our strategy to meet increasing demand for the critical minerals needed for electric vehicles, wind turbines and solar panels to support the energy transition.

Looking at the future, Goldman Sachs recommends the BHP share price as a buy. The company is tipping BHP to deliver fully franked dividends of US$2.05 per share in FY 2023 and US$1.63 a share in FY 2024.

Goldman likes BHP's commodity exposure, especially iron ore and copper. Commenting on BHP, analysts said:

We remain bullish on BHP's commodity mix: With iron ore fundamentals supportive into 2Q23, copper on growing deficits even with global growth risks and metallurgical coal on constrained global supply growth.

BHP share price snapshot

The BHP share price has shed more than 5% in the last year.

This ASX 200 mining share has a market cap of about $219 billion based on the latest share price.

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 positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.

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