Fortescue in standoff with Chinese State-owned iron ore buying desk over low grade ore pricing
Fortescue is the latest Australian miner to become embroiled in a standoff with a Chinese State-owned iron ore buying desk over pricing, which is reportedly moving to blacklist some of its products.
Fortescue has become embroiled in a standoff with a Chinese State-owned iron ore buying desk over pricing, which is reportedly moving to blacklist some of its products.
China Mineral Resources Group is said to have urged domestic steel mills to not take delivery of the miner’s super special fines and new “fortune fines” after July 15.
According to S&P Global, major Australian producers started moving toward such lower-grade products last year but steel mills were concerned about the ore’s performance while battling weak margins.
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By continuing you agree to our Terms and Privacy Policy.It’s understood Fortescue’s short-term contract with CMRG has expired and discussions over pricing for a new deal have been vigorous.
The miner declined to comment.
Established in 2022, CMRG conducts about 70 per cent of the Asian superpower’s tough iron ore pricing negotiations and bent BHP into agreeing to a hybrid pricing formula for Jimblebar fines in April.
The formula linked roughly half the price to a yuan-denominated Beijing port index converted into US dollars and the mining giant also capitulated to a 1.8 per cent discount on select shipments.
“That made BHP the first of the major miners to adopt the Beijing index in a long-term contract,” Wood Mackenzie iron ore research director David Cachot told The West Australian last month.
Calls by Australia’s major iron ore producers, but apparently not Rio Tinto, for Albanese Government help to counter CMRG’s purchasing might faced significant practical and structural constraints, Mr Cachot said.
The call was in response to being “picked off one by one”, he said, but such intervention was unlikely to materially alter underlying market dynamics.
