Here’s why the BHP share price is stumbling on Friday

a sad looking engineer or miner wearing a high visibility jacket and a hard hat stands alone with his head bowed and hand to his forehead as he speaks on a mobile telephone out front of what appears to be an on site work shed.

a sad looking engineer or miner wearing a high visibility jacket and a hard hat stands alone with his head bowed and hand to his forehead as he speaks on a mobile telephone out front of what appears to be an on site work shed.

The BHP Group Ltd (ASX: BHP) share price is on course to end the week with a disappointing decline.

In morning trade, the mining giant’s shares are down over 4% to $35.85.

This leaves the BHP share price trading within a whisker of its 52-week low of $35.56.

What’s going on with the BHP share price?

Investors have been selling down BHP’s shares on Friday amid weakness in the iron ore price overnight.

According to CommSec, the iron ore futures price dropped US$5.30 or 4.8% overnight to US$104.96 a tonne. The steel making ingredient came under pressure after Chinese authorities grappled with a wave of mortgage boycotts sweeping the country’s property sector.

This isn’t just impacting BHP. It has also led to fellow iron ore miners Fortescue Metals Group Limited (ASX: FMG), Mineral Resources Limited (ASX: MIN), and Rio Tinto Limited (ASX: RIO) falling heavily today.

Anything else?

Also potentially weighing on the BHP share price is the update out of rival Rio Tinto this morning.

While Rio Tinto has reaffirmed its iron ore guidance for both costs and shipments, it has warned about inflationary pressures impacting its earnings.

The mining giant commented:

Higher rates of inflation have increased our closure liabilities with an impact to underlying earnings. In the first half of 2022, this resulted in increased charges of approximately $400 million pre-tax within underlying earnings compared with the first half of 2021, including a $300 million increase in amortisation of discount, with the remainder impacting underlying EBITDA.

In addition, Rio Tinto advised that its Pilbara operations are being impacted by unplanned absences. These are of course being driven by a spike in COVID-19 cases in Western Australia.

BHP is due to update the market on its quarterly performance next week.

The post Here’s why the BHP share price is stumbling on Friday appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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