Mensholong LepchaAustralia-listed shares in global miner BHP Group wiped out gains made in 2021 after shares plunged over 7% on Thursday due to a sharp drop in iron ore prices.
Australian Securities Exchange (ASX)-listed shares in BHP Group fell for a third straight day on Thursday as iron ore prices fell over 10% on weak demand outlook from the world’s largest consumer of iron ore, China.
Steel mills in China have been ordered by authorities to limit production in order to cut down emissions, as a part of China's carbon neutrality goals. According to Bloomberg, steel accounts for 15% of China’s carbon emissions, the biggest among manufacturers.
Steel production capped
“Policymakers have circled back to their task of greening the economy with a vengeance in the second half,” said Freya Beamish, chief Asia economist at Pantheon Macroeconomics.
“Steel production is capped at 2020 levels but meeting that target is going to be a tall order, given the strength of production in the first half. Businesses appear now to be taking it more seriously, however, with iron ore selling off hard. This presents a more general drag for industrial production in the second half,” Beamish said.
Furthermore, Caixin China General Manufacturing PMI report released on Wednesday showed China’s factory activity contracted for the first time since April 2020 hurt by COVID-19-related restrictions.
BHP shares emerge as top drag on Aussie benchmark
On Thursday, ASX-listed shares of BHP was the worst performing stock on the benchmark Standard & Poor (S&P)/ASX 200 index.
Investors dragged BHP shares down as much as over 7% while shares in smaller iron ore mining rivals Rio Tinto and Fortescue Metals fell only 1.2% and 0.3%, respectively. The S&P/ASX 300 Metals & Mining index fell 3.6% on Thursday.
ASX-listed shares in BHP wiped out year-to-date gains on Thursday, having been up over 25% less than a month ago.
Down 2.9% year to date
BHP’s recent underperformance compared to its industry peers and broader market comes after the company announced plans to exit its London dual primary listing.
Australia-listed shares in BHP plunged nearly 15% in August to see its worst month in over five-and-a-half years.
Shares in the company was down 2.9% year to date, as of Thursday afternoon.
