BHP Group Surges 2.68% on $175M Contract Win and Iron Ore Rally – Is This the Start of a New Bull Run?

Summary
• BHP Group (ASX:BHP) surges 2.68% to $64.835, hitting its 52-week high of $65.09
• $175 million car dumper contract with Monadelphous Group boosts infrastructure investment
• Iron ore prices climb to 5-month high on Chinese demand, underpinning mining sector gains
• Intraday range of $63.70 to $65.09 reflects strong institutional buying pressure

BHP Group’s sharp intraday rally has captured market attention as the mining giant secures a strategic infrastructure contract and benefits from a broader commodities boom. With iron ore prices surging to a five-month high and copper rebounding on Chilean supply disruptions, BHP’s 2.68% gain underscores its position as a bellwether for global industrial demand. The stock’s breakout above key technical levels and robust options activity signal growing conviction among traders.

Mining Sector Gains and Strategic Contract Drive BHP's Rally
BHP’s intraday surge is fueled by two catalysts: a $175 million car dumper project with Monadelphous Group and a 2.7% jump in copper prices. The contract, part of BHP’s Pilbara infrastructure upgrades, reinforces its long-term iron ore export capacity and validates its strategic focus on operational efficiency. Simultaneously, iron ore futures hit a five-month high as Chinese steelmakers ramp up restocking ahead of the Lunar New Year, driven by tight domestic supplies and environmental restrictions. These dual tailwinds have positioned BHP as a beneficiary of both structural infrastructure spending and cyclical commodity demand.

Iron Ore Sector Gains Momentum as Chinese Demand Surges
The iron ore sector is surging in lockstep with BHP’s rally, with May iron ore futures on the Dalian Commodity Exchange climbing to 801 yuan/ton. Cleveland-Cliffs (CLF), the U.S. sector leader, rose 0.72% as global steel demand gains traction. BHP’s 2.68% gain outpaces the sector’s 2.1% average, reflecting its dominant market share and diversified commodity exposure. The confluence of Chinese restocking and environmental-driven supply constraints is creating a self-reinforcing cycle of higher prices and increased mining sector earnings visibility.

Options Playbook: Leveraging BHP’s Breakout with Gamma-Driven Calls
• Technical Indicators: RSI at 67.4 (overbought), MACD 1.36 (bullish), 50-day SMA at 61.62 (below price), 200-day SMA at 52.71 (far below)
• Key Levels: 65.09 (52W high), 63.70 (intraday low), 60.20 (30D support)
• Options Focus: Aggressive bulls should target BHP20260116C65 and BHP20260116C67.5 for leveraged exposure to the breakout

BHP’s 2.68% rally has created a high-gamma environment, with call options showing strong liquidity and implied volatility. The BHP20260116C65 call (strike $65, expiring 1/16) offers a 57.9% leverage ratio and 0.49 delta, ideal for capitalizing on a potential push above the 52-week high. With a 0.1345 gamma and 0.0717 theta, this contract benefits from both price momentum and time decay. A 5% upside to $68.08 would yield a 124% payoff (max(0, 68.08 - 65) = $3.08).

BHP20260116C67.5 (strike $67.5, expiring 1/16) provides 185% leverage and 0.207 delta, offering asymmetric upside if BHP breaks above $67.50. Its 0.0932 gamma and 0.0479 theta make it sensitive to volatility expansion. A 5% move to $68.08 would generate a 133% payoff (max(0, 68.08 - 67.5) = $0.58).

Action: Buy-to-open BHP20260116C65 and BHP20260116C67.5 for a leveraged play on the breakout. Target $68.08 as a key resistance level; if breached, consider rolling into longer-dated calls.

Backtest BHP Group Stock Performance
The backtest of BHP's performance following a 3% intraday increase from 2022 to the present shows a strategy return of 9.80%, with a benchmark return of 43.58% and an excess return of -33.78%. The strategy's CAGR is 2.41%, indicating moderate growth, while the Sharpe ratio is 0.08, suggesting low risk-adjusted returns. The maximum drawdown was 0.00%, which may imply that the strategy avoided any significant losses during the backtest period.

BHP’s Breakout: A New Chapter in the Mining Bull Market
BHP’s 2.68% surge on a $175 million contract win and iron ore strength signals a pivotal moment in the mining sector’s 2026 narrative. With technicals aligned for a continuation above $65 and copper prices rebounding on Chilean strikes, the stock is positioned to test its 52-week high. Cleveland-Cliffs’ 0.72% gain underscores the sector’s broad-based momentum. Investors should prioritize the BHP20260116C65 and BHP20260116C67.5 options for leveraged exposure to the breakout, while monitoring $63.70 as a critical support level. If $65 holds, the next target is $68.08—a level that could redefine BHP’s 2026 trajectory.