Why is the BHP share price starting the week with a whimper?

BHP shares are underperforming the benchmark on Monday. But why?

| More on:
a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.

Image source: Getty Images

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

The BHP Group Ltd (ASX: BHP) share price is sliding today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed Friday trading for $44.39. In late morning trade on Monday, shares are changing hands for $43.82 apiece, down 1.3%.

That sees the big Aussie miner trailing the benchmark, with the ASX 200 down a lesser 0.4% at this same time.

It's not just the BHP share price that's underperforming though. Fortescue Metals Group Ltd (ASX: FMG) shares are down 1.9%, while Rio Tinto Ltd (ASX: RIO) shares are down 1.5% at this same time.

Here's why the ASX 200 miners are battling headwinds today.

Why is the BHP share price underperforming on Monday?

Most of the selling pressure impacting BHP, Rio Tinto, and Fortescue today appears to be due to the 3% decline in the iron ore price over the weekend. After defying bearish expectations and climbing for most of the first week of July, the iron ore price dipped back to just over US$110 per tonne.

The reason once more looks to be driven by concerns that China's sluggish, steel-hungry property markets have yet to regain any solid growth traction. Coupled with news of growing iron ore stockpiles at China's largest ports, iron ore traders have been favouring their sell buttons.

With iron ore counting as BHP's biggest revenue earner, the BHP share price is joining in that sell-down today.

Indeed, over the half-year to 31 December, the miner reported earnings before interest, taxes, depreciation and amortisation (EBITDA) of US$9.7 billion from its iron ore division alone.

In its half-year report, released on 20 February, BHP estimated it will produce between 254 million and 264.5 million tonnes of iron ore in FY 2024.

So any pull back in demand from China, the world's biggest consumer of iron ore, is going to have an impact on the BHP share price.

The miner addressed its own cautious outlook for Chinese iron ore and other commodity demand earlier this year, stating:

The Chinese economy has been volatile since the zero-COVID policy was eased in December 2022…

Throughout the year authorities have acknowledged that additional policies will be needed to support China's economic recovery. For the balance of FY24 and into FY25, the key question remains how effective the policy push will be. Until we see greater coherence between the policies and their effective implementation, our outlook will remain cautious and conditional.

With today's intraday moves factored in, the BHP share price is down 13% in 2024 but remains up 3% over 12 months.

Motley Fool contributor Bernd Struben 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 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.

More on Resources Shares

Man with rocket wings which have flames coming out of them.
Mergers & Acquisitions

Guess which ASX mining stock is rocketing 65% on takeover deal

This mining stock is starting the week with an almighty bang.

Read more »

View from below of a man with a shovel standing by a hole he has dug in the garden, with blue sky in the background.
Resources Shares

Are Rio Tinto shares worth digging into amid the miner's FY25 outlook?

Let’s explore the outlook for the ASX mining share.

Read more »

A man in his 30s with a clipped beard sits at his laptop on a desk with one finger to the side of his face and his chin resting on his thumb as he looks concerned while staring at his computer screen.
Resources Shares

Why are BHP shares trudging lower on Friday?

Iron ore is a central talking point for BHP's outlook.

Read more »

Miner looking at a tablet.
Resources Shares

Fortescue shares: Here are the must-know highlights from FY24

The financial year just past had its ups and downs for shareholders.

Read more »

Female miner smiling in front of a mining vehicle as the Pilbara Minerals share price rises
Resources Shares

Why did the Arafura share price just leap more than 11%?

The Arafura share price is rocketing on Thursday. But why?

Read more »

View of a mine site.
Resources Shares

Goldman Sachs just upgraded this ASX 200 stock to a buy

It sees the recent sell-off as an overreaction – and an opportunity.

Read more »

Three satisfied miners with their arms crossed looking at the camera proudly
Share Gainers

3 best-performing ASX 200 mining shares of FY24

One commodity is the common thread for this trio of top-performing ASX 200 mining shares.

Read more »

Three miners looking at a tablet.
Resources Shares

What went right and what went wrong for the BHP share price in FY 2024?

BHP shares gave back their first half-year gains and then some in the second half of FY 2024. But why?

Read more »