Australian mining giant agrees to China's tough demands, accepts a loss of 100 billion Australian dollars, giving Europe a vivid lesson!
Recently, the Australian ABC News reported that the Australian mining giant BHP disclosed an important signal to the market: in the annual iron ore contract negotiations with Chinese buyers, it has already accepted the requirement for price reduction. China imports more than 1 billion tons of iron ore annually, accounting for more than 70% of global seaborne trade. Among them, Australia has long been China's largest supplier of iron ore, and the "Australian Big Three" - BHP, Rio Tinto, and FMG - together account for nearly 80% of China's import share. For decades, these companies have almost dominated the trend of iron ore prices by relying on resource monopolies and long-term pricing mechanisms.
But in recent years, the situation has changed. On one hand, China's steel industry has entered a stage of high-quality development, and crude steel production has declined for three consecutive years, leading to a more rational demand for high-grade iron ore. On the other hand, China is accelerating its overseas resource layout, increasing cooperation in projects such as Simandou in Guinea and Vale in Brazil, gradually reducing its reliance on a single source. More importantly, the Chinese side has promoted the use of RMB settlement for iron ore and strengthened the construction of the futures market, providing institutional tools to break the monopoly of USD pricing and the Platts index.
Under this context, BHP's "concession" is not accidental. According to the Australian ABC News, this price adjustment may result in losses of up to 100 billion Australian dollars for Australia in its iron ore exports to China. This figure is calculated based on the current annual export volume of about 700 million tons, with an average price drop of 90-100 US dollars per ton, resulting in a loss of nearly 70 billion US dollars per year. Adding up the contract periods over the next few years, a scale of hundreds of billions is entirely possible.
Previously, European steel mills often had no choice but to accept "pay as agreed" terms when dealing with iron ore giants, even if their costs soared, they had little say. However, China, with its complete industrial chain, vast domestic market, and increasingly mature financial tools, successfully transformed its "buyer advantage" into "negotiation power". This is equivalent to teaching Europe a lesson on its rare earth strategy: without industrial depth and strategic coordination, relying solely on mining rare earth ores is difficult to achieve its goals.
Original article: toutiao.com/article/1855174308588873/
Statement: The article represents the views of the author.