BHP Group Ltd (ASX: BHP) shares are back in the green today.
Shares in the S&P/ASX 200 Index (ASX: XJO) iron ore giant closed down 2.1% yesterday at $41.11. In trading on Tuesday, shares are swapping hands for $41.24, up 0.32%.
For some context, the ASX 200 is up 0.52% at this same time.
This welcome uptick comes despite a modest overnight slide in the iron ore price. The industrial metal slipped more than 0.2% to US$104.18 per tonne.
What's been happening with the iron ore price?
As you can see in the chart above, BHP shares have come under heavy selling pressure in 2024.
How heavy?
Well, at the current $41.24 a share, the ASX 200 mining stock is down 18% since the closing bell sounded at the end of trading on 29 January 2023, when it was trading for $50.41 a share.
To be fair, that doesn't include the $1.10 fully franked interim dividend eligible shareholders will have received on 28 March. If we add that back in, then the accumulated value of BHP shares has fallen 16%.
Much of that selling pressure has come amid a fast-falling iron ore price.
The industrial metal kicked off the year, trading at about US$140 per tonne. Meaning it's lost some 25% over 2024.
Copper, BHP's number two revenue earner, remains up about 4% year to date. However, the copper price has tumbled more than 18% since May 20, and it is currently trading for US$8,752.34 per tonne.
Much of the retrace in copper and iron ore prices has come as China's economy, and particularly its steel-hungry real estate markets, continue to languish, dampening the demand outlook for industrial metals.
In potentially bad news for Aussie iron ore and copper miners, many analysts are forecasting iron ore to trade below US$100 per tonne for most of the remaining year and into 2025.
Liberum Capital has an even more bearish outlook, which is why it has now downgraded BHP shares, alongside Rio Tinto Ltd (ASX: RIO) and Anglo American (LSE: AAL), from a hold to a sell rating.
Are BHP shares a sell?
The shift from hold to sell for Rio Tinto, Anglo American, and BHP shares comes as Liberum's restocking iron ore indicator hit its weakest levels since mid-2022.
"Local demand growth is weak; finished goods and port ore stocks are ballooning; and China's steel net exports are close to record highs," Liberum said (quoted by The Australian Financial Review).
According to Liberum:
Yes, we are already bears on the iron ore price outlook. However, even we are surprised by the collapse in the restocking indicator's own signals here, and more broadly, the clear shift in investors' sentiment on the global growth outlook.
And so, we have downgraded BHP, Rio Tinto and Anglo American.
Liberum forecasts the iron ore price will slide to US$85 per tonne by the end of 2024, down more than 18% from today's prices.
If Liberum has this right, BHP shares may indeed face some further headwinds in the months ahead.
