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BHP Group’s (ASX:BHP) iron ore pricing and contract dispute with China may (nearly) be over, with unconfirmed reports suggesting China Mineral Resource Group is close to striking a deal to resume buying certain products.
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The bluest Oz mining blue-chip we have on the ASX has been wadding through a squeeze from the powerful Beijing-backed market player recently.
The group ordered Chinese steelmakers to stop buying BHP products after September as negotiations around long-term contracts dragged on. It’s failed to truly dominate headlines during that period – aside from JD and me talking about it ad nauseam on the HotCopper Wire – but it has been weighing on BHP.
The reports, shared by ANZ midway through Week 13, suggest China’s iron ore buyer may have come to the table on several BHP contract demands.
While unlikely to be the reason things are moving, the reports came right when Fortescue (ASX:FMG) founder Andrew “Twiggy” Forrest went on the attack against the state-run buyer. He on Wednesday lashed CMRG’s “cartel tactics.”
“I’d say to the CMRG, step away from that gun fight, it isn’t one worth having,” Mr Forrest told Bloomberg in a scathing takedown aimed at Beijing. “Forming a cartel to force down the iron ore price will impact an economy completely. When you threaten someone who has nothing to lose, you can get any kind of response, and all I’m saying is the iron ore price is critical to Australia’s economy.”
Twiggy also warned China against “poking the bear” and urged Beijing to reconsider how aggressively they were moving against Australian iron ore – especially considering how much they currently import from Down Under.
CMRG recently renegotiated contract terms with Rio Tinto (ASX:RIO) and Twiggy’s Fortescue before talks came to a halt in this current BHP standoff situation.
This morning, Singapore iron ore futures fell -1.92%, to $US105.60 a tonne on the unconfirmed reports. The raw material has been climbing from ~$95/tonne since mid-February, mainly on Middle East conflicts.
Heading into Thursday, BHP shares are $50.12/each.
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