Iron Ore Volatility Wreaks Havoc on BHP Billiton Share Price

This morning, BHP Billiton Ltd [ASX:BHP] fell 2.2% to $26.68 per share.

What happened to BHP Billiton share price?

BHP isn’t the only miner down today. Rio Tinto Ltd [ASX:RIO] and Fortescue Metals Group [ASX:FMG] also traded lower, down 1.6% and 1.5% respectively.

Yet it’s no surprise as iron ore fell on Friday. Below is a graph of the iron ore spot price on the Qingdao exchange:

iron ore spot price

Source: Bloomberg

This morning, BHP also said they would too reduce debt by announcing their final pricing of Tender Offers — the price at which they will repurchase their previously issued bonds.

What now for BHP?

Like many miners, BHP will continue to swing up and down, following commodity prices. Throughout 2017, iron ore has been one of the most volatile commodities. And it will likely continue to be so.

If you’re bullish on iron ore in the long term, then you could potentially jump into BHP when commodities in general, along with iron ore are depressed.

Remember in early 2016 when BHP was trading around $15? It was an opportunity that many investors missed. Yet how could they have known that commodity were about to hit a bottom and would rally up from there. The miner followed commodities up in 2016, rallying more than 40%.

Of course we might not see BHP trade to such depressed levels in the near future. However if commodity prices do swing down due to political or economic uncertainty, it might be wise to consider buying Australia’s biggest miner.


Härje Ronngard,

Junior Analyst, Money Morning

PS: There are plenty of Aussie resource stocks which are trading at huge discounts. Resource analyst, Jason Stevenson has written a report on the top 10 mining stocks for 2017. Check out which miners break into Jason’s top ten here.

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