Shares in Anglo-Australian mining multinational BHP have hit the lowest point in a month, with London Stock Exchange stock prices dropping yesterday by 4% from £17.80 to £16.99. At the time of writing, they have fallen a further 0.54% today, with prices going as low as £16.93.
Such a steep decline in prices, analysts say, can be linked to the growing concerns over the impact of coronavirus on China’s economy.
GlobalData analyst David Kurtz said: “With tens of millions of people under lockdown, concerns over the impact of coronavirus are leading to a decline in prices of key commodities, such as copper and iron ore.
“While it is still too early to tell how widespread this disease will be, given BHP’s exposure to these commodities, it is negatively impacting its share price.”
GlobalData analyst Vinneth Bajaj told Mining Technology that China – the world’s largest importer of copper covering 43% of world imports in 2017 – has been a central source of profits for BHP and disruptions to its economy can affect the company negatively.
Bajaj said: “Disruption in Chinese businesses have a huge impact on the global trade, particularly of iron ore, copper, zinc, nickel, and most recently to be added lithium.”
“The latest drop in the BHP’s stock prices, particularly during the second half of this month, may indicate a shrinking economic sentiment due to the increasing cases of the endangering Coronavirus that shoot up abruptly from the mid of this month. With that, the volatile iron ore prices are also certainly weighing on the iron ore giants’ stock prices.”
Several mining companies have performed poorly in the last few days; Anglo American shares dropped today to £20.25 – the lowest in more than a month.
“Other miners with significant proportions of their portfolios in copper and steel-making commodities would be similarly hit, whilst those more focused on gold will benefit from improving prices given gold’s position as a safe haven during market turmoil,” added Kurtz.
