UBS-Iron Ore Coal BHP-CMRG dispute How are exports tracking？-20251124

CMRG expands ban on BHP iron ore to another product from 21-NovOn 21-Nov, there were reports that China's state-run iron ore trader, CMRG, hadwidened the ban on BHP iron ore products to include the low-grade Jinbao blend, withboth companies still locked in negotiations over the annual contract for 2026; thisfollows the reported ban on Jimblebar fines on 19-Sept & all dollar-denominatedcargoes on 30-Sept. According to one source the latest directive may be acountermeasure to the workaround used by some buyers who mix Jimblebar withJingbao to avoid inspections; it is also noted that volumes of Jinbao blend are small sothe disruption is unlikely to be material.

With UBS Evidence Lab data (>Access dataset), we estimate that BHP relies on China for~80% of its shipments, and track 1) BHP's iron ore shipments leaving Port Hedland and2) BHP's iron ore shipments arriving in China. We note BHP exports from Port Hedlandare stable w/w at 5.5Mt (Fig2) and estimated deliveries into China from BHP Australianterminals in November up 12% m/m (Fig3). BHP's market share on the Australia-Chinacorridor has recovered to ~33-34% (vs ~26% in Sept). As existing contracts remainmostly executable, we believe the minimal impact to shipments might reflect delivery ofalready sold 2025 contracts, and that the ban might more meaningfully impactupcoming/new 2026 contracts in January. At the margin, there could also be continuedbuying despite the ban (reportedly at a discount vs benchmark).