The BHP Group Ltd (ASX: BHP) share price experienced plenty of ups and downs in the last 12 months. Is the ASX mining share a buy? I’m going to look at that in this article.
BHP is one of the world’s biggest resource businesses with a number of commodities including iron ore, copper, coal and potash.
Is the BHP share price a buy?
There is a lot to like about the company’s size and its blue-chip status. Its size means it’s very well-placed to handle any downturns the resource sector may see, whereas small companies can be wiped out in a downturn.
Being one of the biggest in the world also gives BHP the most scale, so it has achieved cost advantages compared to some of its smaller mining peers, allowing it to generate higher profit margins and make stronger returns from a mineral deposit.
BHP’s balance sheet’s size is also beneficial because it can get the best funding terms for its debt, and it also has the financial firepower to make acquisitions. The mining giant has been building its exposure to copper in recent times, which I believe is a good move to do and could help the BHP share price in the long-term.
One of the main questions I have right now is what’s going to happen with the iron ore price. The commodity is normally integral to how much profit BHP makes each year.
The iron ore price is currently below US$98 per tonne in January, which is the lowest it has been for a few months. There are reports that Chinese steels mills have been cutting production due to weaker demand and smaller profit margins. Steel output is expected to decline further through the year.
Despite those conditions, iron ore shipments to China have increased with iron ore miners, which may include BHP, increasing iron ore deliveries towards the end of 2024 to meet annual targets.
I’d suggest this is why the BHP share price has been falling in recent months.
On the positive side of things, it was also reported that China has expanded its consumer good trade-in scheme to help stimulate domestic demand, with some expectations that could increase future demand for iron ore.
My final thoughts
Overall, with the BHP share price below $40, I think this is a reasonable time to look at BHP after a fall of 20% since 9 January 2024. I like its growing exposure to copper, though iron ore, potash and coal don’t seem as compelling as they did a couple of years ago.
If the iron ore price falls further, BHP shares could become more interesting if the price falls further.
But, there are other ASX dividend shares that seem more appealing.
