BHP (ASX:BHP) Group Ltd (ASX: BHP) shares have kicked off August on a positive note, trading at $42.73, up 1.0% in late morning trading. This recent uptick comes amid a 2.5% increase in the iron ore price, which has risen to US$101.55 per tonne, and a 2.8% rise in the copper price, now at US$9,225.00 per tonne. The boost in commodity prices is supporting BHP’s share performance as investors anticipate a potential interest rate cut by the Federal Reserve in September.
Performance in July In contrast to the strong start to August, BHP, an ASX mining stock, underperformed in July. The stock closed at $42.69 on 28 June, gaining 4.9% by 4 July to reach $44.77. This initial rise was supported by better-than-expected performances in iron ore and copper prices, BHP’s top two revenue sources. However, this upward trend was short-lived. By the end of July, iron ore prices had dipped below US$100 per tonne, and copper prices fell approximately 7% over the month.
These declines were largely attributed to concerns about the slow recovery in China’s real estate sector, which has significantly affected global commodity markets. Consequently, BHP’s share price ended July at $42.30, marking a 1.0% decrease for the month, while the broader ASX 200 Index saw a 4.2% gain.
Company-Specific Factors In July, BHP also faced specific challenges affecting its stock performance. On 12 July, the company announced a temporary suspension of operations at its Nickel West operations and West Musgrave project starting in October. This decision was driven by persistent low nickel prices and an anticipated oversupply in the market. The stock closed down 0.4% on the announcement day.
Additionally, BHP’s position as the largest company on the ASX by market capitalization was overtaken by Commonwealth Bank of Australia (ASX: CBA) on 12 July, following CBA’s 7.9% share price increase.
The company’s quarterly report, released on 17 July, showed a 13% increase in iron ore production to 69 million tonnes for the quarter and a 1% year-on-year increase to a record 260 million tonnes for FY 2024. Copper production also rose by 8% quarter-on-quarter, reaching 505,000 tonnes. Despite these strong operational results, BHP’s share price fell by 0.9% on the day of the report.
While BHP’s share price has shown some improvement at the start of August, the stock’s performance in July was affected by falling commodity prices, operational challenges, and market dynamics. The company’s strong production results were overshadowed by broader market concerns and specific industry issues, leading to a mixed performance relative to the ASX 200 Index.