A growing number of overseas mines are carrying out yuan settlement for spot trades at Chinese ports, which is not only helpful for the wider application of the yuan in commodity settlement but also illustrates the importance of the Chinese market to global miners, analysts said.
Australian iron ore conglomerate BHP saw its first shipment of yuan-based spot trade iron ore dock at a port in East China's Shandong province on July 10. This demonstrates BHP's long-term commitment to the Chinese market, the largest iron ore importer in the world, and to the flexibility of its iron ore sales to better align customer demand with supply chain capability and support liquid and transparent markets to ensure the sustainable development of the iron ore market, the company said.
The seaborne and port-side markets are distinct and can coexist, while BHP looks forward to continuing to work with key stakeholders on industry-based solutions which support transparency and fair market access across both channels, said Jeremie Louis, BHP's vice-president of Iron Ore Marketing and Sales.
The vessel Vittoria loaded with iron ore from a mine in Western Australia arrived at Rizhao Port, China's major iron ore trading port, two weeks after departing Port Hedland, BHP said.
Shandong Port Group Co, the operator of Rizhao Port, said carrying out yuan settlement for spot trades at ports will also reduce the use of the greenback amid possible economic risks brought by huge exchange rate fluctuations to Chinese steel enterprises.
Zhu Yi, a senior analyst with metals and mining at Bloomberg Intelligence, believes the launch of the yuan-based trade in iron ore is an important step for the Australian company to get closer to the Chinese market, while balancing the possible risks and uncertainties from the US dollar considering the current US inflation increase.
