China's state-backed iron ore buyer, China Mineral Resources Group (CMRG), has asked some domestic steelmakers to refuse delivery of particular portside cargoes supplied by Fortescue, according to industry participants familiar with the discussions. The request, made verbally to selected mills, is set to take effect from July 15 and covers Fortescue's Super Special Fines and Fortune Fines - both classified as lower-grade iron ore products.
The instruction marks the latest instance of Beijing increasing its influence over how iron ore is introduced into the Chinese market. Sources said Fortescue, which dispatches the majority of its ore shipments to China, remains in active negotiations with CMRG on supply arrangements. All individuals who provided details to the reporter asked to remain anonymous because of the sensitivity of the matter.
Fortescue declined to comment on the reported directive. CMRG did not immediately answer requests for comment outside of working hours on Wednesday.
Market reaction to the development was mixed. At 12:57 GMT on Thursday, Fortescue's shares were unchanged, while fellow major miners BHP and Rio Tinto registered declines of more than 1%. The intervention by CMRG follows a months-long standoff with BHP that concluded in April, when BHP said it had finalised supply contract talks with CMRG and Beijing subsequently lifted bans on several of BHP's products.
Industry figures provided a snapshot of portside inventories. A trader, speaking on condition of anonymity, said stocks of Fortescue's Super Special Fines at some of China's main ports totalled 7.22 million tonnes as of June 30. Based on consultancy Steelhome's data, that quantity represents nearly 5% of total portside iron ore stocks, according to a calculation cited by market observers.
The current measures by CMRG build on the entity's role since its 2022 establishment, when it was formed as part of efforts to centralise iron ore procurement and secure improved terms from large upstream miners. Last month, CMRG reportedly told some domestic steelmakers not to enter discussions with Fortescue regarding a new Fortescue product, Fortune Fines, scheduled for shipments from July.
Fortescue's China leadership has also seen recent turnover. The company confirmed last week that its China president departed in June, just four months after assuming the role.
CMRG's actions are a continuation of a broader push to control the flow and contractual terms of iron ore into China. While BHP reached an agreement with CMRG in April, talks with Fortescue are ongoing and the new restriction on specific portside cargoes further underscores the leverage CMRG is asserting in procurement discussions.
The situation remains fluid as negotiations continue and as industry participants monitor port inventories and contractual updates.