- BHP mines multiple minerals, but iron ore is the company’s prime revenue source.
- On 1 January, the price of iron ore hit an eighteen-month high.
- On 3 January, the price of iron ore rose again, but the BHP share price spiralled downward.
BHP is diversified across an array of commodities, with iron ore being its most important, followed by coal, copper, nickel, and potash.
On 1 January, Bloomberg reported a pledge from Chinese President Xi Jinping to strengthen the country’s economy with infrastructure spending and other measures. His statement sent the price of iron ore up to $142.50 per tonne midday before hitting $144.50.
Source: Wall Street Journal
The share price of all three major ASX iron ore producers fell, with some analysts attributing the decline to falling prices for the companies in US markets.
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Source: ASX
An analyst at Shaw and Partners is bullish on BHP, predicting growth in Chinese steel production will continue to defy the faltering Chinese economy. The analyst believes a tight iron ore market will keep iron ore prices high and BHP’s outlook bright.
While financial analysis sites like the Wall Street Journal and Marketscreener.com have OVERWEIGHT and OUTPERPERFORM ratings, analysts’ ratings are decidedly mixed.
At the WSJ, ten analysts have BUY ratings, eleven are at HOLD, and three are at UNDERWEIGHT.
Marketscreener.com has four analysts at BUY, two at OUTPERFORM, seven at HOLD, and two at UNDERPERFORM.
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