Wedoany.com Report on Jan 31st, Due to contract disputes restricting its sales channels to China, Australian mining giant BHP has begun diverting its Jimblebar Iron Ore (JMBF) shipments to Southeast Asian markets. Concurrently, stockpiles of this product at major Chinese ports have seen a significant buildup. This development highlights new shifts in global iron ore trade flows against the backdrop of China-Australia trade relations.
Key Developments
Cargo Diversion: According to shipping data, approximately 95,000 tons of JMBF iron ore arrived in Malaysia in mid-January, marking the first shipment of this product to Malaysia since 2019. Another shipment of about 75,000 tons was sent to Vietnam in December last year.
Stockpile Surge: Since late September last year, stockpiles at Chinese ports have surged by about 360%, reaching approximately 8.1 million tons by mid-January this year. Currently, Chinese steel mills have been instructed not to withdraw the stored cargoes from this batch.
Sharp Export Decline: As a result, global daily exports of Jimblebar iron ore are projected to drop by about 74% compared to levels in January 2025.
Market Response and Context
Sales Strategy Adjustment: To stimulate demand, BHP has expanded discounts on some of its iron ore products. For instance, discounts for Newman iron ore fines in February increased compared to January, which facilitated a recent purchase by Vietnam.
Origin of Dispute: The diversion stems from a procurement contract dispute. The China Mineral Resources Group, established in 2022 to centralize iron ore procurement, instructed Chinese steel manufacturers and traders last September to suspend purchases of BHP's JMBF products while negotiating new annual supply terms.
Impact Assessment: Although the volume of cargo diverted to Southeast Asia remains relatively small compared to BHP's total annual JMBF production exceeding 60 million tons, it indicates the company is actively seeking customer diversification. The company stated it will continue negotiations with the Chinese side and optimize its distribution channels in the meantime.
This adjustment in the flow of Jimblebar iron ore is a direct measure taken by BHP in response to the current contract dispute with China, simultaneously driving sales activities targeting the Southeast Asian market.
