The BHP Group Ltd (ASX: BHP) share price declined by 14% in March, marking one of its most painful months this decade.
BHP is one of the world’s largest miners, producing commodities like iron ore, copper and coal. It also has a Canadian potash (fertiliser) project under construction.
What happened to the BHP share price in March?
BHP shares suffered a painful sell-off of 13.7%, even worse than the S&P/ASX 200 Index (ASX: XJO) which dropped by 7.8%.
As the biggest ASX mining share and one of the biggest companies on the ASX overall, what happens with BHP is important for the ASX 200, ASX-focused exchange-traded funds (ETF) and superannuation funds.
The business is clearly suffering from the fallout of the Middle East conflict.
There are variety of reasons why investors may be feeling negative for a variety of reasons.
The market may be worried about a reduction in economic activity and a fall in demand for commodities, which could hurt the resource prices.
It’s also possible that diesel supply challenges could hurt investor confidence if they’re worried about what could happen to production if not as much diesel is available.
What to make of the situation for the ASX mining share?
The business is certainly in an interesting position where it’s one of Australia’s biggest diesel users, but the diesel price has jumped.
BHP’s main customer is China and it’s hard to know what will happen with its economy. China is supposedly fairly well prepared for a situation like this, with significant reserves.
The ASX mining share may well see an increase in demand for copper if this period makes businesses and countries more likely to want to electrify their operations.
BHP plays an important role in the supplying global commodities and I think its earnings are more defensive than some investors are giving it credit.
I don’t think this is the right time to invest in BHP shares because it’s still trading at a fairly high valuation of more than $50 – it’s up more than 30% in the past year. It’s not as though the iron ore price has soared in recent times.
There are other ASX dividend shares I’d rather buy that have more appealing valuations.
