BHP Shares Tumble as China Halts Iron Ore Purchases

China Mineral Resources Group, the state-owned Chinese iron ore buyer, has told domestic steelmakers and traders not to buy or take any iron ore cargo from BHP, the world’s biggest miner, amid stalled negotiations over contract renewals, sources with knowledge of the development have told Bloomberg.

China Mineral Resources Group, created in 2022 to seek more favorable pricing from the top global miners for the giant Chinese steelmaking industry, is seeking greater influence for China in the global iron ore market, of which it is the biggest consumer.

However, weeks of negotiations between the Chinese state-controlled iron ore buyer and BHP have failed to produce results and talks have broken down.

Earlier this month, China curbed imports of some of the BHP iron ore grades, instructing steelmakers and traders to stop purchasing BHP’s Jimblebar blend fines.

Now China is banning all shipments of BHP cargoes, as the dispute over prices appears to have escalated, according to Bloomberg’s sources.

China Mineral Resources Group told Chinese buyers to halt purchases of any dollar-denominated seaborne iron ore cargoes from BHP. China has also tightened the screws on purchases of the Jimblebar blend cargoes, telling its importers not to take delivery of such at Chinese ports and not to buy Jimblebar shipments on the spot market in the yuan currency.

Following the report by Bloomberg, iron ore futures in Singapore rose by nearly 2% while shares in BHP (LON: BHP) tumbled by 4.8% in London as trade opened on Tuesday.

Earlier this month, global iron ore markets were under renewed pressure as futures prices continued to fall, pushed down by concerns over China’s faltering economy and weakening demand from its steel and property sectors. Despite being the world’s largest consumer of iron ore, China has grappled with a slowdown in construction and manufacturing in recent months.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com