On September 30 local time, Bloomberg reported, citing anonymous informed sources, that China Mineral Resources Group Co. had this week requested domestic buyers to suspend purchases of any US dollar-denominated seaborne cargoes from BHP.
The report stated that this means the signing of new contracts will be completely suspended, including iron ore cargoes already shipped from Australian mines, which are no exception. Currently, BHP has only a small amount of iron ore spot cargo available for trading that has arrived at Chinese ports, and these resources are all priced in Renminbi.
Informed sources revealed that this decision was made after multiple rounds of consultations between the two sides since late last week yielded no results.
On October 1 local time, Australian Prime Minister Albanese claimed that China’s suspension of purchases of BHP iron ore was “disappointing” and expressed hope that this issue could be resolved quickly.
“I want to see Australian iron ore exported to China without impediment. This is important, making a significant contribution not only to the Chinese economy but also to the Australian economy.”
According to reports, China is the world’s largest consumer of iron ore, accounting for approximately 75% of global seaborne iron ore imports.
Reuters pointed out that iron ore is Australia’s most valuable export product. However, a report from the Australian government in June this year stated that as global supply increases, iron ore export earnings might fall to AUD 105 billion by June next year, down from AUD 116 billion in the previous fiscal year.
Currently, China Mineral Resources Group Co. has not responded to requests for comment. A spokesperson for BHP stated that the company cannot comment on commercial arrangements.
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