Australian companies are still waiting for China to buy iron ore? Just now, domestic steel mills received a confidential order, and Australian media suddenly realized something was off!
Reuters reported on July 2, citing five informed sources, that Chinese steel mills will no longer withdraw two iron ore products—Super High-Grade Fines and Fuyun Fines—from Fortescue Metals Group's (FMG) inventory at Chinese ports starting July 15. The news sent Singapore Exchange's August iron ore futures contract soaring to $101.2 per ton, reaching its highest level since June 17.
As of June 30, the inventory of FMG’s Super High-Grade Fines at major Chinese ports totaled approximately 7.22 million tons. According to calculations by Reuters based on data from SteelHome, a steel market intelligence firm, this accounts for nearly 5% of China’s total port iron ore inventory.
Another noteworthy detail: FMG’s China regional president resigned in June, just four months after his appointment. Signs of stalled negotiations had already been evident.
The report states that FMG sells most of its iron ore to China and is currently negotiating supply terms with CMRG. Significant disagreements remain over pricing mechanisms and product specifications.
CMRG, established in 2022, is a key platform driven by Chinese authorities to centralize iron ore procurement reform, aiming to strengthen China’s bargaining power in the global iron ore market. Previously, after months of deadlock, CMRG reached an agreement with BHP in April, prompting Beijing to lift restrictions on several BHP products.
Differing from the peaceful resolution in the BHP case, CMRG has now directly restricted spot deliveries at ports when negotiations failed—indicating a tougher strategy shifting from passive blockage of new contracts to active intervention in the flow of existing spot shipments already in China.
Following the announcement, concerns intensified over tightening iron ore supplies. The most active August iron ore futures contract on the Singapore Exchange rose 2.53%, closing at $100 per ton. While FMG’s stock remained stable, peers in the Australian mining sector—BHP and Rio Tinto—both saw their stocks drop more than 1% during trading.
For FMG, the Chinese market determines its revenue, stock performance, and capital market valuation. Any disruption in exports to China—even if only one quarter’s sales were wiped out—would directly trigger financial report shrinkage, investor panic, and institutional accountability.
The Simandou iron ore project is scheduled to deliver its first shipment of 200,000 tons of iron ore to China in January 2026. Once fully operational, the project is expected to produce up to 120 million tons annually. As Simandou ramps up production, China’s reliance on Australian iron ore will shift from “indispensable” to “optional.”
Original source: toutiao.com/article/1869658295701644/
Disclaimer: This article represents the personal views of the author.