The BHP Group Ltd (ASX: BHP) share price tumbled in early trade today, sliding 3.2% to $37.25 within minutes of opening.
At the time of writing, shares in the iron ore major are down 2.31% trading at $37.59.
What’s driving the BHP share price lower?
Iron ore prices tumble
Iron ore prices slumped overnight, down US$7.14 or 5.8% to US$116.93 a tonne.
According to Fastmarkets, the downward price movement was largely aligned to the “bearish mood” in steel prices and demand.
In the futures market, China’s most active futures contracts for January 2022 delivery on the Dalian Commodity Exchange have opened lower on Friday, down 3.6% to 673 yuan (~US$105) a tonne.
Reuters yesterday reported weakness in China’s steel consumption, quoting analysts as saying stainless steel consumption was “still slow in the short term as recent power rationing has hurt manufacturing activities in the world’s second-largest economy”.
Headwinds impacting Chinese economy
On Monday, China reported a September quarter GDP growth of 4.9% year-on-year, the lowest since the third quarter of 2020.
The Chinese economy faced several headwinds in the last quarter ranging from its energy crisis to surging raw material prices.
Perhaps more relevant to the BHP share price, economic indicators such as factory output, investment in construction and other fixed assets all have weakened.
Chinese policymakers said on late Wednesday that it would ask futures exchanges to take measures to tackle surging coal prices, including raising fees and restricting trade limits.
Surging copper prices lose momentum
Also potentially adding to the BHP share price woes is the sudden reversal of fortune for copper.
Copper prices surged from US$4.09/lb to highs of US$4.82/lb in October as stockpiles hit a 47-year low.
However, copper spot prices fell sharply overnight, closing the session down 3.72% to US$4.55/lb. This is despite the world’s largest publicly listed copper player, Freeport-McMoRan Inc, advising it will producer less copper than expected.
The post Why is the BHP (ASX:BHP) share price slumping today? appeared first on The Motley Fool Australia.
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Motley Fool contributor Kerry Sun 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 Bruce Jackson.
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