China’s state-run iron ore buyer, China Mineral Resources Group Co. (CMRG), has instructed domestic steelmakers and traders to temporarily halt purchases of all new BHP Group cargoes, escalating a pricing dispute that threatens one of the mining giant’s key trading partnerships.
According to sources familiar with the matter, the directive affects new deals, including cargoes already shipped from Australia, where BHP operates its mines. The only BHP iron ore currently available for trade in China is cargo that has already arrived and is priced in yuan. Attempts to resolve the disagreement during meetings last week reportedly failed.
The move follows earlier restrictions on BHP’s Jimblebar blend fines and represents Beijing’s growing willingness to leverage its influence in global raw materials markets. Analysts note that China’s steel demand is moderating, while new iron ore supply from Guinea’s Simandou mine is expected to further shift market dynamics.
“Would China have done this a decade ago, when it heavily depended on imports? No way,” said Tom Price, analyst at Panmure Liberum Ltd. “The difference now is that Chinese steel demand is moderating, and there’s an influx of new supply.”
CMRG, established three years ago to strengthen China’s bargaining position in iron ore negotiations, has instructed mills not to accept Jimblebar cargoes at Chinese ports or purchase them on the yuan-denominated spot market. Some steelmakers have already begun adjusting production parameters to accommodate alternative ore sources.
The disruption has affected markets: Singapore iron ore futures rose 1.8% to $105.05 a ton, while BHP shares in London fell as much as 4.8%, the largest decline since early April.
CMRG did not respond to requests for comment, and a BHP spokesperson said the company could not comment on commercial arrangements.
