It's been a fairly disappointing start to the trading week for the S&P/ASX 200 Index (ASX: XJO). So far this Monday, the ASX 200 has lost another 0.7% and is now approaching 6,400 points. But it's been a far worse day for the ASX 200's largest share by market capitalisation – BHP Group Ltd (ASX: BHP).
The BHP share price has been slammed today. The mining giant is currently down by a nasty 4.82% at $40.47 a share. This latest move means BHP is now down by almost 7% over the past five trading days alone. Its losses over the past month are now stretching close to 15%.
So what's going on with BHP today to elicit such a loss?
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Why is the BHP share price copping a 5% drop today?
Well, it's not exactly clear. We did hear news last Friday that the company has changed its mind and now wants to keep its Mt Arthur coal mine. But this is unlikely to be meaningfully impacting BHP shares today.
So the most likely culprit is the iron ore price. Iron ore forms the crown jewel of BHP's mineral production. The company has benefitted enormously from high iron ore prices over the past few years. These have enabled BHP to fund record dividend payments.
But according to reporting in the Australian Financial Review (AFR) today, iron ore futures have just taken a dive. The paper reports that iron ore futures are currently down 9.1% in China, "as concerns mounted about an economic slowdown and the impact it will have on steel demand".
This would explain why BHP's fellow ASX 200 iron ore miners are also bleeding heavily today. Rio Tinto Limited (ASX: RIO) shares are also down around 5% to just over $101. Fortescue Metals Group Limited (ASX: FMG) has copped an even worse beating. Fortescue shares are down a nasty 7.3% to $17.23 at the time of writing.
So it's likely to be fears over the price of iron ore that is hurting the BHP share price so dramatically today.
At the current BHP share price, this ASX 200 mining giant has a market capitalisation of $204.7 billion, with a trailing dividend yield of 11.86%.
