China's state iron ore buyer has asked some domestic steel mills not to take delivery of certain portside iron ore products from Fortescue, industry sources said, the latest Australian miner to fall foul of Beijing’s push to increase control over the market.
China Mineral Resources Group (CMRG) notified some mills verbally that, from July 15, they must not take delivery of portside cargoes of Fortescue's super special fines and fortune fines, both of which are lower-grade iron ore products, five sources with knowledge of the matter said.
The move escalates CMRG's campaign to assert control over how iron ore enters the Chinese market, following a months-long standoff with BHP that ended in April. Fortescue ships most of its iron ore to China and is still negotiating supply terms with CMRG.
All sources sought anonymity given the sensitivity of the matter. CMRG and Fortescue did not immediately respond to requests for comment outside of working hours.
The most active August iron ore futures contract on the Singapore Exchange was up 2.53 per cent to $100 a tonne, as of 15:03 GMT after climbing to its highest since June 17 at $101.2 earlier in the evening trading session.
Stocks of Fortescue's super special fines at some major Chinese ports stood at 7.22 million tonnes as of June 30, said a separate trader on condition of anonymity.
That represents nearly five per cent of total portside iron ore stocks, according to a Reuters calculation based on data from the consultancy Steelhome.
CMRG last month told some domestic steelmakers not to engage in discussions with Fortescue about a new iron ore product - fortune fines - scheduled for shipments from July.
Fortescue's China president departed in June, just four months after taking the position, the company confirmed last week.
BHP said in mid-April that it had concluded supply contract talks with CMRG, ending a months-long dispute, and Beijing then lifted bans on several of its products.
CMRG was established in 2022 as part of Beijing's efforts to centralise its iron ore procurement and win better terms from upstream mining giants.
(Reporting by Reuters staff; Editing by Emelia Sithole-Matarise and Kevin Liffey)
