BHP Shares Reclaim A$60 Level To Close Month Green

BHP shares (ASX: BHP) closed out July at A$60.31, up 1.96% in the final session and 1.53% for the month, reclaiming a critical psychological level even as the mining giant faces its first industrial action in the Pilbara in years and weakening Chinese demand threatens iron ore prices.

The return above A$60 into the weekend represents a technical victory for BHP shares, which has traded in a tight range around this battleground level for weeks. The advance came despite mounting operational risks at Port Hedland, BHP’s critical iron ore export hub that handles more than 500 million tonnes annually and serves as a linchpin in the global seaborne iron ore trade.

Strike Looming at BHP?

Three unions representing workers at the Port Hedland Bulk Export Terminal have announced plans to halt ship loading for 24 hours on 8 August, followed by another stoppage the following day. The planned action escalates a dispute that has dragged on for more than six months, during which workers conducted an initial eight-hour strike in July, the first such action at BHP’s Pilbara iron ore operations.

The industrial dispute centres on pay structures and employment contracts. Unions argue that BHP is pushing workers toward lower base salaries supplemented by discretionary payments that fall outside collective bargaining agreements. Workers oppose individual employment contracts, contending that discretionary components and unilateral contract changes effectively weaken negotiated conditions and give the company excessive flexibility to alter terms.

A Fair Work Commission hearing scheduled for 4 August may provide a circuit-breaker, though talks earlier in July ended without a breakthrough. The outcome of that process will be closely watched across the Australian mining sector, as the dispute is being viewed as a potential test case for labour relations under new industrial laws.

The operational stakes are significant. Port Hedland functions as a single point of failure for BHP’s Western Australia Iron Ore business, which remains a core cash generator despite the company’s strategic tilt toward copper. Any disruption lasting more than 48 hours could evolve from a manageable delay into a supply chain crisis affecting rail operations, stockpiles, shipping schedules, and ultimately cashflow.

Iron Ore Backdrop

Iron ore prices have provided mixed signals. Spot prices edged up 0.4% to US$96.05 per tonne in late July trading, with Singapore futures rising as much as 1.1% after closing Thursday at their lowest level since February. The bounce reflected some supply-risk premium related to the Port Hedland strikes, but the broader trend remains concerning for BHP and its peers.

Prices are headed for a third consecutive monthly decline, driven by weakening Chinese demand. Iron ore fell 2.5% on Thursday after Beijing refrained from announcing fresh stimulus measures, disappointing markets that had hoped for support for the flagging property and construction sectors. Chinese steel margins remain under pressure, with hot metal output declining for a fourth straight week and July factory activity unexpectedly contracting.

The demand backdrop presents a stark contrast to the supply concerns. While strike threats can temporarily support prices by raising fears of export disruptions, the underlying fundamentals point to slower steel demand growth and more cautious infrastructure spending in China. If the planned strikes prove short and symbolic, the supply-risk premium may quickly unwind, leaving BHP more fully exposed to weakening Chinese economic activity.

Fundamentals Remain Strong, With Copper Leading

BHP’s latest financial reports highlight the company’s strong operational performance and portfolio diversification. Copper now accounts for more than half of underlying EBITDA, reducing pure iron ore price exposure. The company continues to invest in Port Hedland infrastructure, including a sixth car dumper and related rail and port upgrades designed to lift throughput and improve supply chain resilience.

These investments underscore Port Hedland’s strategic importance but also highlight concentration risk. The more infrastructure BHP anchors at the hub, the greater the potential impact when labour or regulatory issues emerge. If unions and regulators increasingly view Port Hedland as a leverage point for rent-sharing, it could become a recurring battleground that raises the required risk premium for BHP’s equity.

Markets appear to be weighing these competing dynamics carefully. The ability to reclaim and hold A$60 despite negative headlines suggests underlying confidence in BHP’s cash-flow resilience and dividend capacity. Iron ore prices in the US$90s remain well above BHP’s cash costs, preserving strong margins from Western Australia operations.

What Next for BHP?

BHP’s share price has seen the A$60 act as both support and resistance in recent months, with repeated tests of the level reflecting uncertainty about the path forward. A sustained break above A$60 could open the door to further gains, while a failure to hold the level on increased volume might trigger profit-taking.

The coming weeks will provide crucial clarity as far as strikes. The Fair Work Commission hearing on 4 August and the planned strikes on 8-9 August represent immediate catalysts that could shift sentiment in either direction.

Chinese economic data releases through August will also shape the iron ore price trajectory and, by extension, BHP’s earnings outlook. Any signs of stabilisation in steel demand or fresh stimulus measures could support prices, while further deterioration in factory activity or property indicators would reinforce the bearish demand case.

A strong print from Capstone Copper on the day did no harm to sentiment into month end, with shares closing 7.12% higher on the day, and Sandfire Resources adding 2.38%.

The reclaim of A$60 heading into August suggests markets are giving BHP the benefit of the doubt for now, banking on strong margins, portfolio diversification, and management’s track record. There remains plenty of debate on the Street as far as valuation, although further support from copper prices would certainly help BHP bulls from here.

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