BHP(US:BHP) Sou Hu Cai Jing·2025-10-06 09:52Core Viewpoint - The recent decision by China Mineral Resources Group to suspend imports of Australian iron ore priced in USD signifies a strategic move to reclaim iron ore pricing power and challenge the dominance of the USD in global trade [1][22]. Group 1: Historical Context - Since China's entry into the WTO, it has become the largest buyer of iron ore, purchasing over 60% of global seaborne iron ore [3]. - Despite being the largest customer, China has faced unfavorable pricing terms, often dictated by three major companies: Vale, BHP, and Rio Tinto, which control over 70% of global seaborne iron ore [5][10]. - Historical negotiations have often resulted in China accepting significant price increases, such as an 80% to 96% hike in 2008, demonstrating the power imbalance in negotiations [8][10]. Group 2: Strategic Moves - China is diversifying its iron ore sources by investing in new mines, particularly in Guinea, which is expected to produce 60 million tons annually by 2026 [12]. - The establishment of China Mineral Resources Group aims to consolidate purchasing power among domestic steel companies, allowing for unified negotiations with major suppliers [14]. - The introduction of a domestic iron ore price index and the push for RMB-denominated transactions are key components of China's strategy to reduce reliance on USD pricing [14][16]. Group 3: Comparative Analysis - The situation mirrors China's previous actions in the soybean market, where it shifted purchases from the U.S. to Brazil in response to trade tensions, leading to significant economic repercussions for U.S. farmers [18][20]. - This strategic maneuvering showcases China's ability to leverage its market power to influence global commodity pricing and trade dynamics [22].