Why did the BHP share price melt down on Monday?

The BHP Group Ltd (ASX: BHP) share price was in a state of decline during the first trading day of this week.

As the electronic gates slammed shut on the Aussie share market this afternoon, BHP shares finished markedly lower. To be specific, the mining giant rolled its way 2.6% downhill to $39 apiece. For context, the S&P/ASX 200 Index (ASX: XJO) took a 1.4% walk into the red on Monday.

What can be attributed to this disappointing move for BHP shareholders?

Iron ore or iron snore?

The BHP share price took a back seat on Monday as investors went cold on commodity-exposed areas of the ASX. Overall, the materials sector slipped 2.3% lower, making it the worst-performing sector.

Today’s negative movement could be tied to the price of iron ore sinking to its lowest level since late 2021. According to Trading Economics, the steelmaking commodity is now fetching around US$96 per tonne, putting it on par with prices witnessed in November 2021 — as shown below.

Downward pressure on commodities, particularly iron ore, has been mounting amid tightening monetary policy. As global economies take action to try and curb inflation, commodities linked to economic growth have been caught in the crosshairs.

Notably, the fall in the BHP share price — and other ASX 200 mining shares — follows remarks out of China suggesting a sustained commitment to the zero COVID-19 policy. Hence, markets might have been nervous about the knock-on impacts on the likes of the steel industry.

Today’s further degradation in iron prices marks the fifth consecutive week of declines.

Could the BHP share price be attractive?

With BHP shares trading roughly at the same price they were a year ago, some investors might be wondering whether the could be value is dipping into the mining company now.

Well, analysts at Morgans tend to think so, with an add rating currently held on the $198 billion behemoth. Morgans believe BHP holds a low-risk profile and has strong free cash flow generation.

For those reasons, the team has a $47.40 share price target on the BHP share price.

The post Why did the BHP share price melt down on Monday? appeared first on The Motley Fool Australia.

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• If I’d invested $5,000 in these 5 ASX shares five years ago, here’s what I’d have now
• Do you want the good news or the bad news on the iron ore price?
• Morgans names the best ASX resources shares to buy now

Motley Fool contributor Mitchell Lawler 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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