BHP(US:BHP) Sou Hu Cai Jing·2025-10-09 22:43Core Viewpoint - The agreement between BHP and China Mineral Resources Group to settle iron ore trades in RMB marks a significant shift in global commodity pricing, granting China pricing power for iron ore, which is one of the largest traded commodities globally [1][3]. Group 1: Historical Context - China's rapid development and increasing demand for iron ore have led to a reliance on Australian iron ore, despite cheaper alternatives from Brazil and Africa, due to the superior quality of Australian products [3]. - For nearly a decade, China has been subjected to BHP's unilateral pricing system, which has been perceived as unfair, yet China had little choice but to comply due to its massive purchasing needs [3][4]. Group 2: Recent Developments - The end of China's real estate boom, combined with global economic downturns and advancements in iron extraction technology, has empowered China to demand RMB settlements for iron ore [4]. - Initially, BHP resisted this demand, claiming it would not significantly impact their operations, but within a week, they conceded to China's demands for RMB settlements starting in Q4 2025 [4][6]. Group 3: Strategic Moves - The establishment of China Mineral Resources Group in 2022 has allowed for a more organized and strategic approach to iron ore procurement, moving away from fragmented negotiations among Chinese steel companies [6]. - BHP's decision to compromise was influenced by the recognition of China's importance as a major customer, especially in light of the struggles faced by other agricultural sectors globally [6].