China called stopped into the BHP iron ore cargo during the pricing discussion

Iron ore buyers of China have asked steel and traders in the country to stop the purchase of iron ore cargo in the sea-demented dollar from BHP BHP during their annual price negotiations, Bloomberg News was reported on Tuesday, quoting people who are familiar with this problem.

China, the largest iron ore consumer in the world, bought about 75% of the Global Sea Iron ore and established China Mineral Resources Group (CMRG) three years ago to buy ore on behalf of steel makers to get more influence as a large single buyer.

BHP, meanwhile, is the largest registered miners in the world and the third largest supplier in China behind Rio Tinto Rio and Vale Vale3.

CMRG did not immediately respond to requests for comments that were removed and BHP spokesman said the company did not comment on commercial negotiations.

“While the headlines read negatively, we see this as a neutral event,” RBC analyst said in a note.

“We see this ‘prohibition’ as a negotiation tactic, most likely efforts to get a lower long -term price.”

If a steel factory is encouraged to buy iron ore from rivals such as Rio Tinto, Vale or Fortescue FMG, cumulatively, it will be more expensive and become less efficient, said RBC, adding that it will also increase the determination of miners when the steel factory competes for raw materials.

Trading sources say that direction will cause a little discomfort for the Chinese factory in the short term because they have filled for the next two weeks before the towering public holidays.

BHP said in August that they would cut exploration expenses after annual profit down to the lowest in five years because China’s demand slowed over the price of iron ore.
Source: Reuters