China has lifted bans on procurement of the key steelmaking ingredient from mining giant BHP Group, sources told Reuters on Tuesday, ending a months-long dispute following a visit by the miner's top executives to its largest customer.
On Tuesday, state iron ore buyer China Mineral Resources Group (CMRG) notified some domestic steel mills that after more than six months, they were free to buy BHP's seaborne cargoes, said two sources with knowledge of the matter who sought anonymity, as the topic is sensitive.
CMRG also told steelmakers they could take delivery from next week of BHP cargoes formerly subject to the bans, the sources added. Shiptracking data on Tuesday from Kpler showed two vessels carrying BHP's Jimblebar fines are set to head to China.
The benchmark May iron ore on the Singapore Exchange lost 1.48 per cent to stand at $103.5 by 0719 GMT.
China Baowu Steel Group's chairman met with CEO Mike Henry and incoming CEO Brandon Craig last week in Shanghai to discuss industry challenges and strategic cooperation, the Chinese company said in a social media post on Friday. They also met with Chinalco, according to a social media post by the firm.
Craig will take the helm of the world's biggest listed miner on July 1. CMRG did not immediately respond to a request for comment. BHP declined to comment.
On social media, Craig said that a "real highlight" of his China trip was his time with Baowu, pointing to its "remarkable" growth thanks partly due to BHP's iron ore, and also citing their five year partnership to reduce emissions in steelmaking.
"Importantly, the relationship runs deeper than the materials we supply," Craig said on Tuesday.
While the resolution to the standoff may look like an early win for the incoming CEO, it's too early to say whether it reflects any change in BHP strategy, analysts said. BHP shares rallied as much as 3.8 per cent.
“I think it had escalated to such a point that you needed a resolution,” said RBC analyst Kaan Peker.
“If they have agreed to sell on multiple indexes or more in RMB or use onshore delivery mechanisms... then that’s a change in strategy,” he said. BHP accepting a small discount on some iron ore for a limited period of time would be the most likely outcome, and in line with the miners' previous stance, he added.
Australian rivals Rio Tinto and Fortescue have both agreed to trial other price indexes for their iron ore.
CMRG, set up in 2022 to centralise iron ore procurement and win better terms from miners, progressively tightened curbs on steel mills and traders buying BHP iron ore since last September while it negotiated with BHP on a supply contract for 2026.
Last September, CMRG banned purchases of BHP's Jimblebar fines, followed by the miner's Jinbao fines last November and Newman fines in March, Reuters has reported.
Chinese steelmakers were not allowed to take delivery of those products unloaded at ports during the period of the bans.
Those curbs had limited availability of iron ore in the spot market, pushing up prices for steelmakers even as China's portside stocks piled up to a record high last month.
Iron ore seaborne prices have mostly held above a key psychological level of $100 a tonne since last August, resisting earlier expectations of some analysts that a supply glut would take them below $90.
Bloomberg News said earlier on Tuesday that China had eased curbs on some BHP cargoes.
(Reporting by Beijing newsroom and Melanie Burton in Melbourne. Additional reporting by Sameer Manekar in Bengaluru. Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Clarence Fernandez)
