Australian miner BHP group completed its first iron ore sale transaction in CNY with Chinese steelmaker Baoshan Iron and Steel (Baosteel). The transaction was a part of a 12-month trial involving multiple cargo deals.
In April, BHP made a deal for cape size vessel of lump and fines at about CNY100mn ($14.1mn). BHP used blockchain method for financial aspects of the transaction and could continue to use the technology for more such trades in the future.
China, the largest consumer has been trying to seek influence over iron ore pricing to help domestic steelmakers to tide over market fluctuations. Additionally, Baosteel also believes the conclusion of more trades in Chinese currency could help fulfill operational needs and result in CNY internationalisation.
Earlier in January, Baosteel had concluded its first CNY transaction with Brazilian mining giant Vale. Baosteel’s holding group Baowu has also stuck a CNY-based deal with Rio Tinto. Australia’s Fortescue Metals is also keen to sell iron ore in CNY after setting up a new trading entity in China in April 2019.
China’s iron ore imports rose by 11pc in April from the prior month. The country had witnessed a disruption of supply chain and economic activities in the first quarter of 2020 due to COVID-19 outbreak.