The BHP share price fell 5% in May, but could it turn the tide in June?

Will BHP go up in June?

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Key points

  • BHP shares fell 5% in the month of May 
  • The iron ore price and copper outlook could impact the company's share price going forward 
  • Goldman Sachs analysts are optimistic on the BHP share price 

The BHP Group Ltd (ASX: BHP) share price declined in May, but what's the outlook for this month?

BHP shares fell about 5% from $44.40 on the last trading day of April to $44.02 at market close on 31 May.

In comparison, the S&P/ASX 200 Index (ASX: XJO) dropped nearly 3% in the month of May.

Let's take a look at the outlook for the BHP share price.

What's ahead?

Given BHP is a major iron ore producer, the price of this commodity may impact the BHP share price in the month of June.

Copper prices and other base metals could also impact BHP, in light of the company's recent acquisition of copper miner OZ Minerals Ltd (ASX: OZL).

Recent data out of China shows commodity imports in May defied expectations, a commodity update released by the ANZ research team on Wednesday states.

Iron ore imports in China lifted 6.34% month on month and 3.95% year on year to 96.17 million tonnes. Commenting on this trend, ANZ senior commodity strategists Daniel Hynes and Soni Kumari said:

Iron ore imports saw a surprise increase to 96mt despite narrowing steel mill profitability. Declining port inventories encouraged more shipments.

Steel mill utilisation rates are improving, with a rebound in daily steel output.

Despite a downbeat steel-demand outlook, iron ore imports are likely to be resilient due to
recent destocking by mills.

Iron ore is currently priced at US$109 a tonne, trading economics data shows.

Copper ore imports rose 16.82% year on year and 21.6% month on month to 2.56 million. However, refined copper imports jumped 9.01% month on month but fell 4.62% year on year. Commenting on copper, Hynes and Kumari noted:

Refined copper imports dropped year-on-year. Increasing domestic production and weaker downstream demand are weighing on refined imports.

Meanwhile, concentrate imports are rising to meet strong demand from smelters. This divergence is likely to continue until downstream demand improves significantly.

Taking a look at broker outlook, the team at Goldman Sachs has a buy rating on BHP shares with a $49 price target.

Goldman is positive on BHP's attractive valuation and commodity prices going forward. Commenting on the outlook, BHP said:

Our Buy thesis on BHP is based on: (1) Attractive valuation, but at a premium to S32 & RIO (2) GS bullish iron ore, copper and met coal, (3) Optionality with +US$20 billion copper pipeline and improved production growth, (4) Robust free cash flow, but still below RIO & S32.

BHP share price snapshot

The BHP share price has fallen 5.79% in the past 52 weeks and 4.4% in the year to date.

This ASX 200 mining share has a market cap of nearly $221 billion based on the current 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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