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China has ordered its steelmakers and traders to suspend purchases of dollar-denominated seaborne iron ore from BHP, amid stalled price negotiations. This directive, issued by the state-run China Mineral Resources Group (CMRG), blocks new contracts, including those for cargoes en route from Australia.
Talks between BHP and CMRG have failed to yield an agreement, primarily focusing on discounts for BHP’s medium-grade ore. BHP, the world’s largest mining company, ranks as China’s third-largest iron ore supplier, following Rio Tinto and Vale. Analysts view the suspension as a potential negotiating tactic to secure lower long-term prices, while BHP confirmed that shipments from Port Hedland remain uninterrupted.
Despite the suspension, analysts suggest short-term impacts on Chinese mills will be minimal due to pre-holiday inventory buildup. However, the standoff highlights rising tensions in the global iron ore market amid slowing demand and decreasing prices, with BHP reporting its lowest annual profit in five years in August.
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