China’s state iron ore buyer is putting BHP’s cargoes up for sale amid ban fears

(Reuters) – Several cargoes of BHP iron ore went on sale in China on Thursday and at least one was sold to a local trader, which may allay fears in Australia that Beijing has imposed a ban on iron ore sales from the world’s largest miner.

BHP sold a cargo of 170,000 metric tons to a Chinese trader on Thursday, the first day of trading after China’s week-long national holiday, according to two traders with direct knowledge of the matter. They added that the price of the shipment was paid in dollars.

On the same day, the Shanghai branch of China Mineral Resources Group (CMRG) — which was set up in 2022 to centralize iron ore purchasing and win better terms from miners — offered eight BHP iron ore shipments totaling 1.14 million tons to steelmakers, according to a supply list reviewed by Reuters.

Australian concerns about the Chinese ban on its iron exports

Bloomberg reported last month that CMRG had asked major steelmakers and traders to pause purchases of all new BHP cargoes, escalating a previous pause on purchases of BHP’s Jimblebar fines product, a type of iron ore, during a standoff in negotiations over new contracts.

The news has raised concerns in Canberra that China is preparing to impose a ban on Australia’s most profitable exports, as it did with coal and other commodities in 2020.

While CMRG told steelmakers last month during negotiations with BHP not to buy Jimblebar fines from BHP, other grades of iron ore could be purchased with CMRG’s permission, two other sources with direct knowledge of the matter told Reuters.

Trading in BHP’s JIMBLEBAR fines remains frozen

None of the cargoes sold or offered on Thursday were Gimbalbar Fines, whose trade remains frozen according to all four sources.

Reuters was unable to determine when CMRG purchased its cargoes from BHP or how many cargoes were sold.

CMRG did not respond to Reuters’ emailed request for comment.

A BHP spokesman said BHP does not comment on trade negotiations.

The two trade sources said Gimbalbar is a small but liquid producer, with about 40 million tonnes produced annually, and a limited shortage is unlikely to cause iron ore prices to rise.

They added that Rio Tinto’s leading Pilbara fines product could also act as an alternative.

Last week, BHP CEO Mike Henry allayed concerns about the CMRG decision in talks with Australian Treasurer Jim Chalmers, according to local media, saying the move was part of trade negotiations.

The Treasurer’s Office did not respond to a request for comment.

(Reporting by Reuters staff in Beijing and Melbourne; Editing by Joe Bavier)