(Reuters) -China’s state-owned iron ore buyer has ordered steel mills and traders to stop purchasing a certain type of BHP iron ore, sources said, adding to a separate ban already in place and escalating a dispute over a new contract.
China Mineral Resources Group (CMRG), set up in 2022 to centralise iron ore purchasing and win better terms from miners, asked Chinese steel mills and traders this week not to buy new cargoes of Jinbao fines, a type of low-grade iron ore from the world’s third-largest iron ore miner BHP, according to two sources familiar with the matter.
“CMRG told mills that they are not allowed to take delivery of Jinbao fines from ports in three days … so there might be a hustle and bustle at ports these few days,” said one of the sources.
Reuters could not determine how many iron ore traders and steel mills received the order from CMRG this week.
The ban is the second after CMRG asked Chinese steel mills and traders in September to stop buying BHP’s Jimblebar Blend Fines. The parties are locked in lengthy negotiations over an annual contract for 2026.
BHP said in response to questions about the Jinbao ban that it does not comment on commercial negotiations. Earlier in the day the miner said it was still negotiating with CMRG.
CMRG did not immediately respond to questions.
SMALL TRADE VOLUMES
CMRG may have chosen to target Jinbao fines instead of other BHP cargoes because trade in the lower-grade iron ore is very small and the ban would not drastically disrupt the market, said both sources and an analyst, who all spoke on condition of anonymity given the sensitivity of the matter.
All three sources said the trade is so small they don’t regularly track volumes.
Tightening supplies of medium-grade iron ore like Pilbara Blend Fines at ports following the first ban have underpinned prices despite weakening demand for the key steelmaking ingredient.
Iron ore prices hit a more than two-week high on Wednesday even as crude steel output in the world’s largest producer of the metal slid to the lowest level since December 2023 as bad weather led some northern mills to cut production.
(Reporting by Reuters staff, Editing by Louise Heavens, Aidan Lewis)
