China’s state-run iron ore buyer has told major steelmakers and traders to temporarily halt purchases of all new BHP cargoes, widening an earlier curb as contract talks have stalled, according to people familiar with the matter.
China Mineral Resources Group, created by Beijing to bolster the country’s sway in the global iron ore trade, asked domestic buyers this week to suspend purchases of any US-dollar-denominated seaborne cargoes from the Australian miner, the people said, asking not to be identified discussing private deliberations.
The decision followed several meetings between the two sides since late last week that failed to produce results, they said.
BHP is one of China’s main iron ore suppliers.Credit: Bloomberg
China is by far top the consumer of iron ore globally, while BHP, the world’s biggest mining company, is one of three giant suppliers that provide the bulk of the material to the country’s steelmakers.
The new restriction marks an escalation from the halt on BHP’s Jimblebar blend fines earlier this month, and highlights Beijing’s determination to gain greater influence over prices.
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Established three years ago, CMRG has been tasked with shifting the balance of power in negotiations from miners such as BHP, Rio Tinto and Vale to China’s vast steel industry.
The earlier curbs have also been tightened, the people said. CMRG has instructed mills not to take delivery of Jimblebar cargoes at Chinese ports, nor to buy such shipments on the yuan-denominated spot market. The measures have prompted some steelmakers to begin adjusting production parameters to accommodate alternative ores.
CMRG didn’t respond to requests for comment. A BHP spokesperson said the company couldn’t comment on commercial arrangements.
