I. China’s Historical Lack of Pricing Power
As China’s steel industry expanded rapidly over the past two decades, iron ore demand surged, and China became the world’s largest importer. However, pricing remained dominated by others. Global supply is highly concentrated—Australia and Brazil control over 70% of the world’s export supply. Mining giants such as Rio Tinto, BHP, and Vale dominate the pricing landscape with near-monopoly power.
Under the early long-term benchmark pricing model, global miners negotiated annual prices with only a few large steelmakers, leaving most Chinese mills with no choice but to passively accept.
As the benchmark system collapsed, the Platts Index took over. But because it relies on quotes from a small, opaque group of participants, it is susceptible to influence by major miners and financial capital.
With no unified bargaining body, Chinese steelmakers long suffered from high costs and squeezed margins.
China Mineral Resources Group: Reshaping the Global Pricing System for Iron Ore and Pellets
II. The Logic and Core Mission Behind CMRG’s Formation
CMRG was created to reverse China’s passive position in iron ore pricing. Its core missions include:
1. Centralized Procurement (Unified Bargaining)
By consolidating demand from Chinese steelmakers, CMRG builds massive purchasing scale and strengthens bargaining power, correcting the previous “each mill fights alone” problem.
2. Promoting RMB Settlement
Global iron ore trade is dominated by USD payments, exposing Chinese firms to FX risks and dependency on the dollar system. CMRG promotes RMB-based settlement, reducing exchange-rate exposure and increasing China’s autonomy in global trade.
3. Expanding and Diversifying Supply Chains
Beyond Australia and Brazil, CMRG is opening channels in the Middle East, Africa, Iran, and more. For example, China’s cooperation with Guinea’s Simandou project is expected to bring a large new stream of high-grade ore to China—strengthening supply security and reducing concentration risk.
4. Reforming the Spot + Medium/Long-Term Pricing System
CMRG promotes greater use of long-term contracts to reduce reliance on volatile spot prices and stabilize expectations for Chinese steel producers.
5. Building a “China Price Center”
Leveraging cities like Shanghai, China aims to establish an iron ore price reference that reflects China’s real supply-demand conditions, providing an alternative benchmark to global markets.
III. CMRG’s Operating Mechanisms and Impacts on Pricing
1. Unified Procurement Scale
China imported around 1.1 billion tons of iron ore in 2024. Through consolidation, CMRG holds massive purchasing volumes—forcing global miners to take its demands seriously and strengthening China’s leverage in negotiations.
2. A New Negotiation Model With Major Miners
Previously, Chinese mills negotiated individually and from a position of weakness. Now, CMRG leads unified negotiations. For example, in the 2025 talks with BHP, CMRG demanded more reasonable pricing terms, shifting the dynamics in China’s favor.
3. Promoting the “Index + Long-Term Contract + Basis” Pricing Model
This model combines market flexibility with contract stability and targeted adjustments—providing steelmakers with more rational and predictable pricing mechanisms.
4. The Significance of Shanghai as a Pricing Hub
With strong financial infrastructure and trading capacity, Shanghai’s iron ore price center (e.g., SHFE) reflects real-time market data such as port inventories and demand conditions, creating a price more aligned with China’s realities.
IV. Effects on Pellet Pricing
With China’s dual carbon goals, high-grade pellets—low in impurities and efficient in emissions reduction—are in rising demand.
CMRG stabilizes pellet prices through:
- centralized procurement,
- long-term supply contracts, and
- benchmark diversification.
It also weakens the influence of Platts by developing China-based pellet indices, better reflecting domestic spot market conditions.
Diversified suppliers (Iran, India, Russia, Middle East) increase competition and lower volatility. When one supplier faces disruptions, others fill the gap, enhancing China’s market stability.
V. Global Chain Reactions
Australia & Brazil
As traditional dominant suppliers, they are upgrading technology, optimizing capacity, and exploring new markets to reduce dependence on China.
Middle East & Africa
These regions are gaining new opportunities through cooperation with CMRG, from mine development to infrastructure building—creating new supply channels for China and development opportunities for these countries.
Toward an “Asian Iron Ore Pricing System”
With Asia as the world’s largest consumption region—and China as its core—CMRG’s growing influence may reshape global pricing into a more Asia-centric model that better represents regional supply-demand dynamics.
Key Challenges
- Balancing market forces with policy guidance
- Managing global price volatility caused by geopolitics, macroeconomics, and market sentiment
- Operational complexity in centralized procurement
Long-Term Outlook
If supply-chain diversification, RMB settlement, and China-based indices continue to strengthen, China may gradually gain sustainable global pricing influence. However, iron ore prices will always remain affected by global dynamics, cyclical demand, and producer-country policies.
Conclusion
China Mineral Resources Group is becoming a central actor in reshaping the global pricing structure for iron ore and pellets. Despite existing challenges, its strategic initiatives point toward the establishment of a more fair, rational, and stableglobal pricing order—providing a stronger foundation for the sustainable development of China’s steel industry and the global metals ecosystem.
