Insights

Why the BHP (ASX:BHP) share price fell 9.5% in March 

Why the BHP Group Ltd (ASX: BHP) share price slumped 9.5% in March to underperform the broader ASX 200 and its mining peers
The post Why the BHP (ASX:BHP) share price fell 9.5% in March  appeared first on The Motley Fool Australia. –

A stockmarket chart on a red background with an arrow going down, indicating falling share price

The BHP Group Ltd (ASX: BHP) share price slumped 9.5% in March, underperforming both the broader ASX 200 and its S&P/ASX Materials (INDEXASX: XMJ) peers in March. 

Why the BHP share price underperformed

Ex-dividend driving underperformance 

The BHP share price went ex-dividend on 4th March for a fully franked $1.311 dividend. Shares generally fall on the ex-dividend date to reflect the dividend being paid. This is similar to how shares typically fall after a capital raising. On 4 March, the BHP share price closed $1.58 or 3.10% lower. 

By including the dividend investors would have received in March, the BHP share price fell 6.9% compared to the face value 9.5% fall. 

China’s crackdown on pollution 

China, the world’s largest greenhouse gas emitter, has made firm commitments to net-zero emissions by 2060. This means China will have to phase out key Australian exports. Which will include resources such as coal and slash the production of carbon-intensive steel, cement, and chemicals. 

While the target is decades away, China has taken some baby steps to mitigate the pollution. In particular, in some of its heavy industrial cities. In mid-March, factories in Tangshan were ordered to limit or halt production. This was applied on days when a heavy pollution alert was in place.  

Iron ore prices high but for how long? 

Despite potential headwinds for iron ore prices over the medium to long term, prices have remained firm at around US$167 per tonne this week. However, the outlook for prices is far less rosy.  

In a quarterly review by Australia’s Office of the Chief Economist, iron ore prices were forecasted to “remain well above US$100 a tonne until mid-2021 before easing to just over US$75 by the end of 2022”.

From an export perspective, it said that “Stronger prices are expected to push Australia’s iron ore export values up to a peak of $123 billion in 2020–21. An easing in prices and stronger Australian dollar are subsequently expected to push earnings back to a still-strong $95 billion by 2021–22.”

Keep tabs on Brazilian supply 

Production constraints in Brazil have supported record iron ore prices. The Office of Chief Economist believes that these factors are likely to persist for at least another six months. However, its commentary puts the spotlight on Brazil’s iron ore giant, Vale. 

On December 2, Vale released an update to its guidance, which
reduced its expected output for 2020 from 310-330 million tonnes to 300- 305 million tonnes. This will add significantly to supply pressures over the coming year.

China’s stimulus could slow 

China’s infrastructure driven economic recovery is a key catalyst for the rapid purchases of Australian iron ore. The report notes that “any easing in Chinese stimulus measures will also lead to fairly rapid downward shifts in prices from the current forecast level”. 

What’s next for the BHP share price? 

ASX iron ore majors are heavily reliant on a buoyant iron ore price. This allows them to maintain market leading dividends and solid share price performances. If the forecasts from the Office of the Chief Economists hold true, then this would see a domino effect in lower iron ore prices. And, possibly, a weaker BHP share price and lower dividends. 

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Kerry Sun 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.

The post Why the BHP (ASX:BHP) share price fell 9.5% in March  appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!