The share price of BHP Group Ltd (ASX: ASX:BHP) has been under pressure today (5 June 2024), falling amid a broader decline in global metals prices. As of Wednesday afternoon, BHP shares are trading at AU$43.88, down 0.89% from their previous close of AU$44.28. This follows a 1.2% decline on Tuesday.
Broader Market Impact
The downturn isn't isolated to BHP alone. Other major mining stocks are also experiencing declines. Shares of Fortescue (ASX:FMG) Metals Group Ltd (ASX: FMG) have dropped by 0.97%, while Rio Tinto Ltd (ASX: ASX:RIO) shares are down 1.17%. The broader mining sector's slump is weighing on the overall market sentiment.
International Influences
BHP's decline on the ASX follows a significant sell-off in its international listings. Overnight, BHP shares on the New York Stock Exchange (NYSE) closed down by 2.2%. The international sell-down is largely driven by a retreat in global metals prices, particularly copper and iron ore.
Decline in Metals Prices
The price of copper, which is BHP’s second-largest revenue earner after iron ore, dropped by 2.0% overnight to US$9,945 per tonne. Despite being near historic highs, copper prices have fallen almost 9% since May 20. Iron ore prices also saw a decline, dropping 2.1% overnight to US$107.65 per tonne. On May 7, iron ore prices were just under US$120 per tonne, having fallen from US$143 per tonne in early January.
Iron Ore Price Context
The iron ore price had gained through most of April and early May due to optimism that China’s renewed stimulus efforts would boost its struggling property sector, a key driver of steel demand. However, these hopes have faded in recent weeks as analysts grow increasingly skeptical about the effectiveness of these measures in reviving China’s steel-hungry property market.
Daniel Hynes, a senior commodity strategist at ANZ Group Holdings Ltd (ASX: ANZ), noted that recent property support measures in China have not generated significant optimism about stronger demand. "Further iron ore price gains will likely be capped by persistent concerns over the state of the Chinese property market," he said.
Robert Rennie, head of commodity and carbon strategy at Westpac Banking Corp (ASX: ASX:WBC), echoed similar sentiments, stating that iron ore prices are unlikely to surpass US$120 per tonne anytime soon. He pointed out that iron ore inventories are rising in China at a time when they would typically be falling, further dampening prospects for a price rebound.