Investing.com — Fortescue shares fell on Thursday after a Reuters report said China’s state-backed iron ore buyer had instructed some domestic steelmakers to stop accepting deliveries of certain lower-grade iron ore products from the Australian miner, as supply negotiations between the two sides continue.
Fortescue Metals Group Ltd () shares fell 1.1% to A$19.03, underperforming Australia’s broader market, with the S&P/ASX 200 down about 0.1% in afternoon trade.
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According to Reuters, China Mineral Resources Group (CMRG) has verbally told some steel mills not to take delivery of Fortescue’s Super Special Fines and Fortune Fines from July 15. The report, citing people familiar with the matter, said the restrictions apply to portside cargoes and mark the latest step in Beijing’s efforts to tighten its oversight of iron ore procurement.
Reuters said the move comes as Fortescue remains in negotiations with CMRG over supply agreements. Last month, the state-backed buyer had also reportedly asked some mills not to discuss Fortescue’s new Fortune Fines product ahead of its planned launch.
The reported restrictions follow a similar dispute involving BHP Group Ltd (ASX:BHP) that lasted several months before the miner reached a supply agreement with CMRG in April. Reuters reported that Beijing subsequently lifted restrictions on several BHP products after those negotiations concluded.
CMRG was established in 2022 to centralize China’s iron ore purchasing and strengthen its bargaining position with the world’s largest mining companies. Reuters reported that Fortescue ships the bulk of its iron ore to China, making the country its most important export market.
According to Reuters, inventories of Fortescue’s Super Special Fines at major Chinese ports stood at 7.22 million metric tons as of June 30, representing roughly 5% of total portside iron ore inventories based on Steelhome data.
Reporting by Roushni Nair