BHP Share Price Drops 0.64% As China Centralizes Iron Ore Procurement

Summary:

The BHP share price falls 1.1% in two days after China formed a new state-owned company to handle its mining business.

The BHP share price is down for a second straight day as investors continue to dump the stock on China’s latest action to dominate the ‏iron ore market. Reports say that China has set up a state-owned iron ore company with a capital outlay of $2.97 billion (20 billion CNY) to handle the country’s investments in the mining sector and to oversee the procurement of raw materials from its various global suppliers.

The new company, to be known as the China Mineral Resources Group, will be headed by Chairman Yao Lin, who formerly chaired the Aluminum Corp of China (Chinalco). Investors in BHP reacted negatively to the news, offering the stock on Wednesday and Thursday to send the BHP share price lower.

However, BHP Group’s Chief Financial Officer David Lamont insists that the move by China to form a state-controlled mining conglomerate will not affect the company negatively. He says the company will work to cement ties with existing Chinese clients.

The BHP Group is the world’s largest iron ore producer. Most of its production is bought by China. The BHP share price is down 1.1% in the last two days but remains up for the week by 0.99%.

The rejection from the 2127.0 resistance has truncated the recovery move. For the bears, this means a move to challenge the 2061.5 support level (25 November 2021 low). Below this level, additional support targets lie at 1995.5 (15 July low) and 1925.5 (21 October 2021/26 November 2021 lows). Another target to the south becomes available once the bears take out 1925.5. This is at 1846.5, the site of a prior low seen on 2 November 2021.

Conversely, a break of the 2144.0 resistance (14 July and 20 July 2022 highs) opens the way for the bulls to push the breakout move from the wedge further north. The target for the measured move at the next resistance level is seen at 2198.5 (1 July low). If the price advances beyond this point, 2264.5 (4 July/7 July highs) and 2330.5 (30 June high) will enter the mix as additional upside targets.