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Sources say that China has increased iron ore restrictions on BHP as negotiations drag on.

Sources say that China has increased iron ore restrictions on BHP as negotiations drag on.
Sources say that China has increased iron ore restrictions on BHP as negotiations drag on.

People?with a knowledge of the matter said that China's state run iron ore buyer has increased restrictions on buying new seaborne ore cargoes?from?BHP, as a contract dispute that has been ongoing for months drags on.

China 'Mineral -Resources?Group (CMRG) has told traders to purchase fewer seaborne shipments of BHP flagship products, Mac fines, Newmanfines and Newman lumps. Two people, who spoke anonymously due to the sensitive nature of the issue, confirmed this.

The restrictions that were widely reported in September and November do not apply to these products.

BHP declined comment while CMRG didn't respond immediately to an email request for comment.

Many traders reported that sales of BHP cargoes have been unusually low in comparison to last week. They attributed this to the 'growing fear on the market regarding a more aggressive approach by the state-run purchaser.

CMRG was set up in the year 2022 with the aim of centralising iron ore purchasing and gaining better terms from miner. In September, it banned domestic steel mills from buying BHP’s Jimblebar fines?, a form of iron ore.

As?negotiations continued, the government extended its ban to Jinbao in November.

Two iron ore traders reported to? They were ordered by CMRG, to obtain permission before purchasing any BHP seaborne goods. Since then, they have?applied and received no reply.

Two separate sources familiar with the situation report that stocks of 'Jimblebar' cargoes had accumulated at major Chinese ports, reaching a record high of 9.8 million tonnes by 'February 26. This is a 457% increase from late September.

Bloomberg broke the story first. (Reporting and editing by Tomasz Janowski)

(source: Reuters)