Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

BHP shares: why did they drop after the latest FY21 Q3 report?

The BHP Group posted its Q3 activities report for the period ending 31 March 2021. Despite posting record levels of iron ore production in Western Australia, why have BHP shares traded 1.63% lower in the last 24 hours?

  • Record iron ore production of 188 metric tonnes in year-to-date
  • Metallurgical coal production cut to 70-73 metric tonnes
  • Price of iron ore reaches a ten-year high
  • Looking to trade the BHP share price? Open an account today

Global commodities giant BHP Group (BHP.AX) posted its full-year (FY21) third-quarter (Q3) update on 20 April, causing the BHP share price to fall from $47.43 to lows of $46.19. Why did investors look to sell off BHP shares and will this downward trend lead to a longer-term retraction?

The report began with revealing record levels of iron ore production across Western Australia, totalling 4% year-on-year (YoY) growth to 188.3 million tonnes. It was also supported by record average throughput at its Escondida copper mine in Chile, which saw copper production guidance for FY21 rise from 1535 kt to 1660 kt.

Did inclement weather harm coal production and BHP shares?

Although the BHP Group left annual production guidance for iron ore untouched for the remainder of FY21, it downgraded a string of additional commodities, citing poor weather conditions. Production guidance for metallurgical coal has been limited to 39-41 metric tonnes, which has had a knock-on effect on the unit cost of Queensland Coal, rising to $78 per tonne.

Production guidance was also slashed for energy coal to 18-20 metric tonnes from a previous target of 21-23 metric tonnes.

Is the BHP share price affected by missing iron ore production targets?

Q3 iron ore production weighed in at 66 metric tonnes, which was short of the 67.2 metric tonnes targeted previously set by Macquarie (MQG.AX). This is 4% lower in Q3 than Q2 and has been blamed on inclement weather and equipment maintenance.

The recent hurricane season in the Gulf of Mexico has also played havoc with BHP’s petroleum production from the year-to-date to March 2021. It’s down 8% so far to 75.8 metric tonnes. Meanwhile, metallurgical coal had fallen by 2% to 28.8 metric tonnes and energy coal had fallen hugely year-on-year by 17% to just 4.8 million tonnes.

You can buy and sell the BHP share price using CFDs and spread bets with IG. Register for a live trading account today to get started.

Will the price of iron ore and investment in further projects underpin BHP shares?

The BHP share price may be buoyed by the continued resurgence in Iron Ore (IRN) spot price. The steel-making commodity reached ten-year highs of 178.54p before the close of trading on 20 April, driven by demand far outstripping supply. This confidence may be welcomed by the BHP Group, with the ability to achieve full value for their supply.

Also, BHP Group is forging ahead with investment plans in new projects. Some $8.5 billion has been ring-fenced for four key projects spanning iron ore, petroleum and potash production. The marquee South Flank iron ore project is still on course to commence production by the end of Q2 2021.

Mike Henry, BHP Group chief executive, said the mining giant is ‘reliably executing [its] major projects, bringing on new supply in copper, petroleum and iron ore’.

BHP has also entered a joint venture with Exxon Mobil Corporation (XOM.N) in West Barracouta’s natural gas field to generate domestic gas supply for the east coast of Australia. West Barracouta has untapped premium gas resources that should help to underpin BHP’s Bass Strait natural gas production and diversify its domestic customer base further.

Want to trade BHP long or short?

Open an account with us or log in to your existing account to get started now.

Keen to learn more about the BHP Group? Here are some other topics you may be interested in:

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Act on share opportunities today

Go long or short on thousands of international stocks with spread bets and CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.