China’s state-run iron ore procurement agency, China Mineral Resources Group (CMRG), has ordered domestic steelmakers to immediately halt all purchases from BHP, the Australian mining giant, in a move that’s sending shockwaves through the $200 billion global iron ore market. The directive, issued on September 30, 2025, marks a dramatic escalation in a commercial dispute that could reshape the delicate balance of global commodity flows.
The ban, as reported by Bloomberg and Metal Miner, expands beyond the earlier September restriction on BHP’s Jimblebar product. Now, all dollar-denominated cargo purchases from BHP are off the table for Chinese mills and traders. This follows a week of failed negotiations between CMRG and BHP representatives over long-term contract terms. Neither side could agree on a framework, prompting CMRG to take what some analysts are calling an unprecedented step.
The market reaction was swift and, in some ways, counterintuitive. BHP’s London-listed shares plunged 4.8% on Tuesday morning, the steepest single-day decline since early April. Yet, paradoxically, iron ore futures climbed over 1% to $160 per tonne in Singapore trading. The contradiction highlights the deep uncertainty swirling around this standoff. Will other suppliers fill the gap, or will reduced BHP shipments create scarcity and drive prices even higher?
CMRG’s role in this saga is central. Established in July 2022 with $6.5 billion in registered capital, its mission is to consolidate the purchasing power of China’s once-fragmented steel industry. Before CMRG’s creation, about 500 Chinese mills negotiated individually with mining majors like BHP, Rio Tinto, and Vale. This fragmentation weakened China’s bargaining position and left it vulnerable to price swings. Now, CMRG represents over half of China’s steelmakers in supplier negotiations and controls the largest share of China’s $200 billion annual iron ore import market. According to Horizon Insights analyst Bancy Bai, “The existence of CMRG is primarily aimed at fundamentally solving the problem of excessive dependence on iron ore imports.”
Jimblebar, BHP’s Western Australian operation, produces about 60 million tonnes annually of ore with 60% iron content—a staple in Chinese steelmaking. When CMRG first halted purchases of Jimblebar blend fines earlier in September, some state-owned mills withdrew orders entirely, while others stored shipments in bonded port zones to avoid customs clearance. The China Iron & Steel Association echoed CMRG’s recommendations, and while neither body holds formal regulatory authority, their political clout makes compliance essentially mandatory.
The heart of the dispute lies in pricing. The latest ban targets dollar-denominated transactions, revealing a crucial dimension of the standoff. Chinese buyers have pushed for yuan-priced contracts to reduce exchange rate exposure, while mining companies like BHP have traditionally priced iron ore in US dollars. CMRG is seeking to shift benchmark pricing mechanisms away from volatile spot markets and toward more stable, annually negotiated long-term contracts. BHP and its peers, however, have resisted abandoning spot-market pricing—a system that allowed prices to soar during China’s infrastructure boom, generating windfall profits for miners.
China’s appetite for iron ore is massive: it consumes roughly 70% of the global seaborne trade, importing 1.4 billion tonnes worth over $192 billion last year. Yet this creates a mutual dependence. BHP derives 62.6% of its revenue from Chinese customers, and iron ore accounted for 44.7% of BHP’s total sales in fiscal 2025. The company produced a record 290 million tonnes of iron ore last year, boasting EBITDA margins of 53%. Other Asian markets like Japan, South Korea, and India collectively absorb about 108 million tonnes of Pilbara iron ore annually, but they can’t easily take on all of BHP’s Chinese-bound volumes. This creates pressure on both sides to resolve the standoff—BHP must find alternative markets or accept discounted sales, while China risks reduced supplies or higher costs from substitute sources.
The stakes are particularly high for Australia, where iron ore remains the nation’s single largest export commodity. Australia shipped $168 billion worth of iron ore to China last year, making up roughly 35% of its total merchandise exports. Political tensions between Canberra and Beijing have periodically disrupted trade in wine, barley, coal, and lobsters, but iron ore had largely escaped sanctions due to China’s acute dependence. This latest action suggests Beijing may now feel confident enough to test that limit, buoyed by CMRG’s consolidation efforts and three years of strategic stockpile building.
David Cachot, iron ore research director at Wood Mackenzie, cautions that “the unique structure of the iron ore market, with its concentrated supply from very low-cost producers and the specific quality demands, means that CMRG’s leverage, while enhanced, will not be absolute.” The ban on BHP could last until the company makes concessions on contract terms; previous restrictions on Jimblebar fines have persisted since mid-September.
Meanwhile, iron ore prices have continued to rise despite overall weakness in China’s steel industry. According to Metal Miner, the most-traded January iron ore contract on the Dalian Commodity Exchange rose 0.82% to $112.94 per metric ton, while the benchmark September iron ore on the Singapore Exchange edged up 0.24% to $105.75 per ton. Steel benchmarks like rebar and hot-rolled coil prices rose 1.25% on the Shanghai Futures Exchange. This is puzzling analysts, as China’s steel production and local consumption have not recovered at the expected rate. Some believe that forecasts predicting record Chinese steel exports by year’s end are driving the uptick in iron ore prices, as more export-driven production could mean higher demand for raw materials.
China’s official limit of 1 billion tons of steel output per year has not yet been reached, leaving room for production increases in late 2025. After three consecutive months of declining steel output, Chinese mills ramped up production in early September, with daily output averaging 2.087 million tons—a 7% month-on-month increase. Iron ore imports surged as well, with August volumes reaching 105.23 million tons and September forecasts pointing as high as 112.2 million tons.
Industry analysts expect China’s steel exports to remain elevated through 2025, driven by competitive pricing, overseas infrastructure projects, and strategic trade partnerships. The China Iron and Steel Association is actively engaging with procurement heads to stabilize raw material supply chains, further supporting steel producers’ export capacity. A weaker yuan also boosts China’s export competitiveness, helping to offset domestic economic uncertainty.
For other major miners like Rio Tinto and Vale, the BHP ban may be a harbinger of things to come. Both companies face similar pressure from CMRG but have not yet agreed to long-term contracts on Beijing’s preferred terms. Fortescue Metals, Australia’s third-largest iron ore exporter, has maintained “constructive engagement” with CMRG, and its lower-grade ore makes it less central to the dispute. BHP, for its part, has declined to comment on commercial arrangements but faces several strategic options: diversifying markets, accepting pricing concessions, waiting out the ban, or seeking a diplomatic resolution through Australian government channels.
This confrontation is about more than just contracts and cargoes—it’s a window into China’s determination to reshape commodity markets where it holds dominant demand. CMRG has already succeeded in reducing iron ore price volatility and consolidating purchasing power. The BHP ban demonstrates Beijing’s willingness to accept short-term disruptions for longer-term strategic gains. For Australia and global commodity markets, the outcome of this standoff will set important precedents for future negotiations—not just for iron ore, but for everything from copper to lithium.
As the dust settles, both sides are weighing their next moves, knowing that the world is watching—and that the stakes couldn’t be higher for the future of global trade.
