The pros and cons of buying BHP shares in 2026

The ASX mining share BHP Group Ltd (ASX: BHP) has had a strong 12 months. Now investors need to look towards next year to decide if it's a buy today or not.

There are a lot of moving parts to BHP because of how many commodities the business is exposed to, including iron ore, copper, coal and potash.

Investors can't control what happens with resource prices, but we can control when to buy (and sell). It's important to remember that commodity prices can be volatile and cyclical, which can be both an opportunity and a risk.

Let's take a look at some of the positives and negatives of buying in 2026.

Positives about BHP shares

It's not surprising to me that the BHP share price has risen well over 20% in the past six months (at the time of writing), given the surprising strength of some commodities.

The iron ore price is currently at around US$107 per tonne, according to Trading Economics. A few months ago, I thought it would be priced under US$100 per tonne by now.

A higher resource price is fantastic for a commodity business because it's receiving more revenue for the same production, which largely drops onto the net profit line as well.

Copper is a great commodity for the long-term and short-term. Copper has long-term demand tailwinds for its role in electrification and decarbonisation. In a recent note, analysts from broker UBS wrote about copper:

The medium-term outlook has been bullish for years… will 2026 be the year the market finally experiences real tightness? We are cognisant that the copper rally in 2H25 has been driven more by speculative positioning on supply disruptions/ downgrades than physical tightness and we do not forecast an acceleration in global demand in 2026.

But we have visibility/conviction on limited growth in global mine output for the 2nd consecutive year and believe acute tightness in the concentrate market & tightening scrap will result in a sharp slowdown in refined output that will push the market into deficit in 2026, resulting in inventory drawdowns and further sustainable price upside.

That seems like a very positive outlook for copper's impact on BHP shares.

Negatives

The strong rally of the BHP share price may mean it doesn't have that much more room for gains in 2026.

One of the reasons I'm cautious about the mining giant is that there is a huge new iron ore project in Africa called Simandou (partly owned by Rio Tinto Ltd (ASX: RIO) ), which could have a negative impact on the elevated iron ore price considering due to the impact this could have on the global supply and demand situation.

UBS wrote about the iron ore price:

We expect prices to remain ~$100/t over the next 6mths with demand stable & incremental supply growth modest (Simandou 10-20mt 2H weighted); medium-term we expect additional supply from Simandou/the majors to be part offset by India/ depletion of marginal producers; however, we find it difficult to see the bull case for iron ore and we forecast prices falling back to ~$90/t in 2027 (90th percentile of cost curve) as higher cost tonnes make way for Simandou.

In other words, its iron ore earnings may fall in the next year or two.

According to CMC Markets, there are currently 15 recent analyst ratings on the business, with three buy ratings, 11 hold ratings and one sell rating. However, the average price target on BHP shares is $43.56, implying a slight fall over the next year from where it is at the time of writing.

In my view, it looks like there are other ASX shares that could be better buys.

The post The pros and cons of buying BHP shares in 2026 appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2025