BHP Group Ltd (ASX: BHP) shares are bucking the broader market sell-off today.
Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday trading for $49.77. During the Thursday lunch hour, shares are swapping hands for $49.92 apiece, up 0.3%.
For some context, the ASX 200 is following the lead of US markets and is down 0.4% at this same time.
But it's not just BHP shares that are outperforming today.
Rio Tinto Ltd (ASX: RIO) and Fortescue Metals Group Ltd (ASX: FMG) shares are both also trading in the green.
And the ASX 200 miners look to have a resilient iron ore price to thank for their good fortunes.
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BHP shares outperform on iron ore surge
As you're likely aware, BHP shares generate the bulk of their revenue from iron ore, with copper coming in a distant second.
For the company's FY 2023 results, BHP reported earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$6.7 billion from its copper operations.
The EBITDA from iron ore, on the other hand, came in at US$16.7 billion.
Over the 12 months, BHP produced 257 million tonnes of the industrial metal. And the miner is forecasting FY 2024 iron ore production in the range of 254 million to 264.5 million tonnes.
And with the iron ore price defying the bears and gaining another 0.6% overnight to trade for US$142.55 per tonne, the outlook for BHP's interim FY 2024 dividend payout is looking up.
BHP shares currently trade on a 5.2% fully franked trailing yield.
What's boosting the iron ore price?
In late May the iron ore price dipped below US$100 per tonne. And many analysts were forecasting that, with China's struggling real estate markets, the industrial metal wouldn't top that level again for some time.
However, by 23 October, the iron ore price had reached just over US$115 per tonne. And with the price continuing to move higher since then, BHP shares have gained 15% since 23 October.
A lot of the tailwinds boosting the iron ore price are blowing out of China. Over the latter months of 2023, the Chinese government and central bank boosted their economic stimulus measures, with a particular focus on lifting the lagging, steel-hungry, property markets.
As for what investors in BHP shares may expect from the iron ore price for the rest of 2024, ANZ Group Holdings Ltd (ASX: ANZ) believe the industrial metal will continue to demand between US$130 and US$140 per tonne for the early months of this year.
The bank's analysts believe the iron ore price will then retrace back to the US$100 per tonne range by the end of 2024.
Commenting on the outlook for iron ore amid the ongoing issues with China's economy, ANZ commodities strategist Soni Kumari said (quoted by The Australian Financial Review):
Concerns about its property market are still lingering, and we expect this to continue in 2024. It is getting offset by some of the increased infrastructure spending and the revival in manufacturing sector we are going to see.
However, ANZ believes the latter half of 2024 will see iron ore prices come back to earth, with Kumari saying, "optimism is going to fade in the second half".
She added, "Then we will start seeing a significant decline in iron ore prices because of the economic slowdown expected that will weigh on steel demand in China."
Still, if iron ore can continue to trade near its current levels over the coming months, the interim dividend from BHP shares (generally paid towards the end of March) could surprise to the upside.
