Shares of BHP (ASX:BHP) Group Ltd (ASX: BHP) have shown a modest rebound today, trading at $41.24, up 0.32% from the previous close of $41.11. This uptick contrasts with a 2.1% drop experienced yesterday, and comes as the S&P/ASX 200 Index (ASX: XJO) also moves higher, up 0.52%.
The recent recovery in BHP’s share price, an ASX mining stock, comes despite a slight decline in the iron ore price, which fell over 0.2% to US$104.18 per tonne. This decline is part of a broader trend impacting iron ore, which has experienced significant volatility in 2024.
BHP shares have faced considerable pressure this year. The current share price of $41.24 represents an 18% drop from the closing price of $50.41 on January 29, 2023. When accounting for the $1.10 fully franked interim dividend paid on March 28, the accumulated value of BHP shares has decreased by approximately 16%.
Iron ore began the year at around US$140 per tonne, marking a 25% decrease over the year. Similarly, the price of copper, BHP’s second-largest revenue contributor, has fallen more than 18% since May 20, despite being up about 4% year-to-date. This decline in copper and iron ore prices has been driven by sluggish economic activity in China, particularly within its real estate sector, which has dampened demand for industrial metals.
Analysts have a bearish outlook on iron ore, with forecasts predicting it may fall below US$100 per tonne for the remainder of 2024 and into 2025. Liberum Capital has responded to these forecasts by downgrading its recommendations for BHP, Rio Tinto Ltd (ASX: ASX:RIO), and Anglo American (JO:AGLJ) (LSE: AAL) from a hold to a sell rating.
Liberum’s downgrade reflects concerns over weak local demand growth, increasing finished goods and port ore stocks, and record-high steel net exports from China. The firm’s restocking iron ore indicator has reached its lowest levels since mid-2022, underscoring a significant shift in investor sentiment regarding global growth prospects.
Liberum forecasts that the iron ore price could decline to US$85 per tonne by the end of 2024, suggesting that BHP shares may encounter additional challenges in the months ahead.