(Reuters) – On Thursday, multiple cargoes of iron ore from BHP were made available for purchase in China, with at least one sold to a domestic dealer, alleviating Australian concerns over a potential ban from Beijing on iron ore imports from the leading global miner.
On the first trading day following China’s week-long national holiday, BHP successfully sold a 170,000-metric-ton cargo to a Chinese trader, according to two traders familiar with the transaction. The payment for this cargo was made in U.S. dollars, they noted.
In a related move, the Shanghai branch of China Mineral Resources Group (CMRG), established in 2022 to streamline iron ore acquisitions and negotiate better deals with miners, presented offers for eight BHP iron ore cargoes, aggregating 1.14 million tons, to steel producers, based on an offer document reviewed by Reuters.
AUSTRALIAN CONCERNS OVER POTENTIAL CHINESE EXPORT BAN
Last month, Bloomberg reported that CMRG instructed major steelmakers and traders to temporarily suspend the purchase of any new BHP cargoes, which marked an escalation from an existing pause on buying BHP’s Jimblebar fines, a specific grade of iron ore, amid stalled negotiations regarding new term contracts.
This development heightened anxieties in Canberra, reminiscent of China’s 2020 ban on Australian coal and other commodities, suggesting a possible similar restriction on Australia’s top export, iron ore.
While CMRG recommended that steelmakers refrain from acquiring BHP’s Jimblebar fines last month, it was communicated that purchases of other iron ore grades could still proceed with CMRG’s approval, according to two additional sources with firsthand knowledge of the situation.
STATUS OF TRADE IN BHP’S JIMBLEBAR FINES REMAINS UNCHANGED
Reports indicate that none of the cargoes traded or listed on Thursday included Jimblebar fines, with trading in this specific grade continuing to be stalled, as confirmed by four sources.
Reuters has not been able to ascertain the timing of CMRG’s cargo acquisitions from BHP or the total number of cargoes sold thus far.
CMRG did not reply to an email from Reuters seeking comments.
A spokesperson for BHP indicated that the company does not disclose details related to commercial negotiations.
Despite its relatively small volume, Jimblebar produces around 40 million tons a year, and a minor shortage is unlikely to significantly impact iron ore pricing, two trading sources added.
Additionally, it was mentioned that Rio Tinto’s leading Pilbara fines could serve as a viable alternative.
In light of the recent developments, BHP’s CEO Mike Henry reassured Australian Treasurer Jim Chalmers that CMRG’s actions were part of regular commercial discussions, according to local news reports.
The Treasurer’s office has not provided any comments regarding this matter.
(Reporting by Reuters staff in Beijing and Melbourne; Editing by Joe Bavier)
