BHP(US:BHP) Sou Hu Cai Jing·2025-10-18 06:55Core Viewpoint - BHP has agreed to conduct iron ore transactions in RMB, marking a significant shift in the international trading landscape and a milestone in the internationalization of the RMB [1][3]. Group 1: Company Overview - BHP is Australia's largest iron ore group and has been the largest supplier of iron ore to China for decades [3]. - The company has been generating substantial profits from iron ore exports to China, earning over a billion dollars annually, significantly more than the profits of the Chinese steel industry [5]. Group 2: Strategic Moves by China - China has implemented a strategy to control steel production and established the China Mineral Resources Group to unify procurement negotiations, enhancing its bargaining power [7]. - The shift to RMB for iron ore transactions is part of China's broader strategy to reduce reliance on the US dollar and promote "de-dollarization" in international trade [9]. - China has diversified its iron ore supply sources beyond Australia, including Brazil and Russia, reducing its dependency on Australian iron ore [9]. Group 3: Infrastructure Development - China is investing in infrastructure to facilitate iron ore transportation from alternative sources, including constructing large-capacity ships and railways in Africa [9][11]. - This infrastructure development demonstrates China's capability to overcome geographical challenges in securing iron ore supplies [9]. Group 4: Implications for Global Trade - The agreement with BHP signifies a shift in power dynamics, where market strength and technological capabilities dictate trade rules [11]. - The successful model of using RMB for iron ore transactions can be replicated in other commodity markets, benefiting China's manufacturing sector and the broader economy [11].