China said to relax curbs on some BHP iron ore cargoes

China’s state-backed iron ore buyer has told several steel mills in the country they are allowed to purchase some BHP Group cargoes, an apparent concession in a months-long commercial dispute.

Officials from China Mineral Resources Group Co. told plants they can resume bidding for some BHP cargoes denominated in US dollars from Tuesday, according to people familiar with the matter. Mills have not yet been explicitly allowed to take BHP physical deliveries from Chinese ports, but a notice is expected, they said, asking not to be named discussing private commercial details.

BHP and CMRG have been locked in a tug-of-war over the terms of long-term iron ore contracts that supply a large proportion of China’s steel mills since last September. CMRG initially banned the Jimblebar fines grade, before imposing broader restrictions on all dollar-denominated cargoes after BHP rejected proposed terms.

The status of Jimblebar cargoes was not immediately clear.

The apparent easing in CMRG’s position follows a visit to China by Brandon Craig, BHP’s incoming chief executive officer. Craig met with leaders from China Baowu Steel Group Corp. and CMRG, the people said. Current CEO Mike Henry joined him for some of the trip, Craig said in a LinkedIn post.

CMRG didn’t immediately respond to a request for comment. BHP declined to comment on commercial negotiations.

Set up in 2022, the state-owned iron ore buyer was tasked with shifting bargaining power in iron ore negotiations away from major miners such as BHP, Rio Tinto Group and Vale SA. CMRG has described the way iron ore prices are set as “unfair” and “irrational,” arguing the system favors the dollar-denominated seaborne market over China’s domestic one.

Iron ore futures in Singapore, the global benchmark, extended declines after the report on the easing of curbs. The steelmaking staple fell 1.9% to $102.65 a ton as of 12:07 p.m. local time. Futures on the Dalian Exchange dropped 1.4% to 768 yuan a ton.

(By Alfred Cang and Katharine Gemmell)