BHP(US:BHP) Sou Hu Cai Jing·2025-10-15 03:54Core Viewpoint - The recent agreement between Australia's BHP to settle iron ore transactions with China in RMB marks a significant shift away from USD, indicating a strategic move towards the internationalization of the RMB and granting China pricing power in iron ore trade [1][3][5]. Group 1: Strategic Implications - The decision by BHP to accept RMB for iron ore transactions signifies a major victory for China, as it not only reduces reliance on the USD but also enhances the global standing of the RMB [1][3]. - This agreement allows China to reclaim pricing power in iron ore trade, which is crucial for its steel production sector, previously dominated by Western interests [1][5]. Group 2: Market Dynamics - China's Mineral Resources Group has been actively pushing for a unified purchasing strategy to enhance bargaining power against Australian suppliers, reflecting a shift in market dynamics where China seeks to assert its dominance as the largest iron ore consumer [3][5]. - The iron ore trade has historically seen Australia exert significant pricing power, with prices soaring to over $200 per ton despite production costs being around $21.75 per ton, severely impacting China's steel industry profitability [3][5]. Group 3: Negotiation Outcomes - Australia's initial resistance to changing the settlement currency indicates a strong reliance on iron ore exports as a key revenue source, but the realization of China's determination led to a swift change in stance [7]. - The diversification of China's iron ore import channels has reduced Australia's leverage, as China can source iron ore from multiple suppliers, diminishing the impact of any single supplier's pricing strategy [7].