China's CMRG Ban on BHP Iron Ore Slams Capesize Rates
China Mineral Resources Group (CMRG) has imposed a temporary ban on new purchases of dollar-denominated seaborne iron ore cargoes from BHP, leading to a significant drop in Capesize bulk carrier rates. The move, which began in early October 2025, is part of China's broader strategy to secure essential resources and counter price increases. The extreme sensitivity of Capesize markets to iron ore trading disruptions is due to the heavy dependence of these vessels on iron ore cargo. Following the announcement, Capesize bulk carrier rates collapsed by approximately 25% within a week, with a staggering 12.5% single-day drop. The Baltic Exchange's 5TC index, a key indicator for global dry-bulk shipping, tumbled to levels not seen since late August 2025. China's ban on BHP's dollar-denominated shipments, which accounts for around 20.8% of China's annual import volume, is a strategic move to exert greater control over iron ore price trends. The ban occurs during China's Golden Week holiday period, maximizing negotiating pressure. Shipping companies can mitigate dependency on conflict-affected routes by diversifying supply sources, investing in alternative shipping routes, enhancing logistics flexibility, and exploring new markets outside of China. The temporary ban on BHP's dollar-denominated iron ore cargoes by CMRG has had a substantial impact on Capesize bulk carrier rates. Negotiations are expected to continue through the Golden Week holiday period, with trading resuming on October 8, 2025. This move reflects China's strategic shift towards greater state control over essential industrial inputs and its willingness to leverage its position as the dominant buyer in the market.
