CHINA has lifted its ban on purchases of BHP iron ore, ending a dispute that had restricted steel mills from buying seaborne cargoes from the mining giant for more than six months, said Reuters.
State iron ore buyer China Mineral Resources Group (CMRG) notified domestic steel mills on Tuesday that they were free to buy BHP cargoes and could take delivery of previously banned shipments from next week, the newswire reported citing two sources familiar with the matter.
CMRG had progressively tightened curbs on BHP products since last September during contract negotiations, banning purchases of Jimblebar fines, followed by Jinbao fines in November and Newman fines in March (names of BHP mines in Pilbara from which fines mined). The restrictions had reduced spot market availability and pushed up prices for Chinese steelmakers even as portside stockpiles rose to record levels, said Reuters.
The resolution follows a visit to China last week by outgoing BHP CEO Mike Henry and his successor Brandon Craig, who met with China Baowu Steel Group’s chairman in Shanghai to discuss industry challenges and strategic cooperation. Craig, who takes the helm of the world’s largest listed miner on July 1, also met with Chinalco during the trip.
Analysts cautioned against reading too much into the outcome.
RBC analyst Kaan Peker told Reuters the dispute had escalated to a point where resolution became necessary, but that a lasting strategic shift would only be confirmed if BHP had agreed to sell on alternative price indexes, accept renminbi-denominated transactions or use onshore delivery mechanisms.
A modest discount on some volumes for a limited period was the more likely outcome, he added.
