“It changes the rules of the trade and strengthens China’s pricing influence in the iron ore market,” Xu added.
Under the deal, more than half of the pricing formula for some cargoes will be linked to yuan-denominated portside transactions before being converted into dollars, according to people familiar with the negotiations. The traditional Platts benchmark, long central to global iron ore pricing, has reportedly been excluded from covered shipments.
The Growing Influence
However, the implications stretch far beyond iron ore.
Global commodities are priced overwhelmingly in U.S. dollars, reinforcing the U.S. dollar’s status as a reserve currency. By accepting Chinese pricing benchmarks, BHP has effectively acknowledged China’s market leverage, as it is the world’s largest iron ore importer.
China buys roughly 75% of global seaborne iron ore, yet pricing power has historically remained concentrated among miners and dollar-based benchmark providers. Therefore, Beijing created CMRG specifically to challenge that imbalance and reduce dependence on Western-controlled commodity pricing systems.
The timing is also geopolitically significant. Tensions in the Middle East have renewed fears over energy security, exposing vulnerabilities in dollar-based trade settlement.
Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis, described BHP’s move as “a small step, but directionally important.”
That pressure is already moving through the sector. Fortescue, a pure-play iron ore supplier, is reportedly close to reaching its own long-term supply agreement with CMRG. The miner has already expanded yuan-denominated trade with China, securing a 14-billion-yuan syndicated loan last year.
The De-dollarization Effect
Still, the commodity market is a tightly intertwined system in which trade flows dictate where institutions park their money. As more trade moves into yuan and away from the dollar, central banks may accelerate diversification of reserves into alternative assets — particularly gold.
In a note from April 27, Deutsche Bank said that de-dollarization could become a major long-term catalyst for gold. The bank noted central banks have sharply increased gold holdings while reducing dollar reserves over the past two decades.
Therefore, if gold’s share of global reserves rises to 40% from roughly 30% today, Deutsche Bank estimates prices could reach $8,000 an ounce within five years — nearly 80% above current levels.
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