Australian iron ore supplier embraces Chinese market, settling yuan
The Vitoria ship laden with iron ore from a mine in Western Australia arrived at Rizhao, China’s main iron ore trading port, on Sunday, two weeks after leaving Port Hedland. Photo Source: Shandong Port Group Co
Australian iron ore group BHP on Sunday hailed its first shipment of yuan-based spot commercial iron ore to berth at a port in east China’s Shandong Province, as Australian companies step up efforts to maintain business in the Chinese market amid strained bilateral ties over Australia. hostile approach to China.
The Vitoria ship loaded with iron ore from a mine in Western Australia arrived at the port of Rizhao, China’s main iron ore trading port, on Sunday, two weeks after leaving Port Hedland, according to a statement issued by BHP on Sunday.
The arrival marks the official start of BHP’s Shanghai subsidiary, a wholly owned subsidiary, since it was recently established to better serve customers in China, the world’s largest importer of iron ore.
At an event celebrating the ship’s arrival on Sunday, Jeremy Lewis, vice president of marketing and sales (iron ore) at BHP, said iron ore sales in US dollars and the spot market for yuan in ports have their own characteristics and can complement each other and coexist, according to the official statement.
Industry insiders and experts said the launch of yuan-based trade in iron ore marks an important step for the Australian company to move closer to the Chinese market, while balancing potential risks and uncertainties from the US dollar sparked by high US inflation.
Overseas mines conducting yuan settlement for spot trade at ports is beneficial to the broader application of yuan in commodity settlement and reduces the use of the dollar amid potential economic risks posed by massive exchange rate fluctuations for Chinese steel companies, Shandong Port Group Co., the operator of the Rizhao port said in a statement sent to Global Times on Monday.
Wang Guoqing, research director of the Beijing Lang Steel Information Research Center, told the Global Times on Monday that the yuan settlement trade would not only enhance the bargaining power of domestic iron and steel enterprises on iron ore prices, but also avoid the risks of exchange rate fluctuations. , while ensuring profit margins and cost stability for enterprises.
Moreover, the market price of buyers and sellers will be relatively stable, measurable and beneficial to sustainable trading partnership, even though the US dollar remains the main currency for iron ore trading at the moment, Wang said.
Moreover, experts noted that the yuan settlement movement is a reflection as Australian companies intend to approach the Chinese market amid growing expectations of improved relations after recent meetings between high-ranking government officials from both sides.
Australian companies know they can’t always play by their own rules in trading partnerships with Chinese customers, their largest global buyer, and using the Chinese yuan to trade is a positive change and will unleash greater potential for iron ore trade with China, said Chen Hong, president of the China Association of Australian Studies and director of Center for Australian Studies at East China Normal University, told the Global Times on Monday.
“There should be a consensus reached by both Chinese and Australian companies to balance the use of dollars in trade for a more reliable and sustainable partnership, especially amid rising inflation risks in the United States,” Chen said.