Chinese state iron ore trader to halt some BHP orders in dispute

China’s state-run iron ore trader has told the country’s steel mills to temporarily stop using a popular product from BHP Group after talks on long-term contracts faltered, according to people familiar with the matter.

China Mineral Resources Group Co., created by Beijing to boost pricing power in the global iron ore trade, urged mills to suspend purchases of BHP’s Jimblebar blend fines from next week, the people said, asking not to be identified discussing private deliberations. The call was echoed by the China Iron & Steel Association, they added.

While neither body has formal authority over any individual steelmaker’s commercial operation, the recommendation has effectively become binding because of CMRG’s political clout and its direct reporting lines to top government officials, the people said.

The move underscores China’s push to gain greater bargaining power with the world’s top iron ore suppliers, arguing that its vast steel industry should secure better terms. Established three years ago, CMRG has been tasked with shifting leverage from major producers such as BHP, Rio Tinto Group and Vale SA toward the world’s largest iron ore buyer.

CMRG and CISA spokespeople didn’t respond to a request for comment. A BHP spokesperson said it couldn’t comment on commercial arrangements.

Some large state-owned mills have already withdrawn orders for Jimblebar cargoes, while others are weighing storing shipments in bonded port zones rather than clearing them through customs, the people said. Jimblebar is one of BHP’s key mines in Western Australia, supplying ores with about 60% iron content that are widely used in Chinese sintering blends.

The giant trader has expanded its role to try and stabilize the market and curb price volatility. It has been pushing to purchase cargoes directly from miners under long-term contracts at discounted rates, but little progress has been made, the people said.

Futures of the steel-making ingredient in Singapore rose as much as 1.3%, before easing slightly to $106.50 a ton by 4:14 p.m. on Friday. Yuan-priced iron ore on the Dalian exchange advanced 0.9%.

The steel association convened a meeting in Beijing on Thursday to review market conditions and prepare for a new port-side spot index for imported iron ore, according to a statement. The industry has been working on a local benchmark to reduce reliance on global measures such as S&P Global Commodity Insights’ Platts index.

Senior trading executives from major Chinese mills and trading houses attended the meeting, the statement said.

(By Katharine Gemmell and Alfred Cang)