Why Shares of BHP Soared in March
Shares in resources company BHP Group Limited (NYSE: BHP) rose 10.9% in March, according to data provided by S&P Global Market Intelligence. I've defined BHP as a "resource" company to reflect its overall exposure to energy and a broad range of mining commodities. Therefore, when the prices of critical commodities/materials increase, the value of BHP's assets (iron ore, oil and gas, copper, metallurgical coal, nickel, and potash) will increase also, and so will BHP's share price.
BHP is merging its oil and gas business with Woodside Petroleum, but BHP shareholders will receive shares in the company created out of the merger. Hence, it's fair to say BHP's share price still has significant exposure to movements in the price of oil. The reason is that before the merger takes place, potential BHP investors will be entitled to a part of the new oil-and-gas-focused company. Otherwise, the key to BHP's prospects lie in iron ore, copper, and metallurgical coal.
Steel demand is pivotal to BHP's prospects. Image source: Getty Images.
Source Fool.com
