Some Fortescue iron ore cargoes held up as CMRG talks stall

Some Fortescue Ltd. iron ore cargoes due in China next month are being held up because negotiations between the Australian miner and the country’s state-backed buyer remain deadlocked, according to people familiar with the matter.

Some Chinese steelmakers aren’t currently able to schedule delivery of the cargoes for July, the people said, asking not to be identified because the matter is private. Due to concerns over potential shortages, some buyers sought offers on Friday for alternatives to Fortescue’s ore, pushing prices higher.

Fortescue is operating under short-term agreements that are due to expire at the end of June. Its talks with CMRG over long-term contracts have stalled, and it’s unclear whether the placeholder agreements will be rolled over while negotiations continue.

Officials at China Mineral Resources Group Co. have surveyed mills about their use of Fortescue’s ore and asked them not to conduct private negotiations with the miner on new contract terms, according to some of the people.

Fortescue declined to comment. CMRG didn’t immediately respond to a request for comment. Singapore iron ore futures rose 1.3% to $98.75 a ton.

The impasse marks the latest clash between major overseas miners and CMRG, which was established to consolidate China’s iron ore purchasing power and strengthen its negotiating position. BHP Group was locked in a months-long standoff with the group before reaching an agreement in April.

(By Katharine Gemmell and Alfred Cang)