Tensions have escalated in the iron ore trade between China and Australia as Beijing has ordered its state buyer China Mineral Resources Group (CMRG) to suspend purchases of all new dollar-denominated seaborne cargoes from mining giant BHP Group Ltd.

The move, reported by Bloomberg, is seen as part of a broader strategy by China to strengthen its position in ongoing negotiations over 2026 supply contracts. The suspension follows earlier instructions from mid-September for steel mills to avoid buying BHP’s Jimblebar blend fines, a specific iron ore mix.

While Chinese authorities have characterized the halt as temporary, the decision has raised alarm in Australia, whose economy remains heavily reliant on iron ore exports.

Prime Minister Anthony Albanese described the ban as “disappointing” and urged China to return to “normal trade practices.” He emphasized that Australian ore should be able to flow freely to global markets without restrictions. The government has pledged to work closely with BHP and engage with Beijing in an effort to resolve the standoff.

Analysts warn that the dispute could ripple through global iron ore markets, potentially affecting pricing and supply dynamics at a time when both demand and margins are under pressure in the steel sector.

Despite the tensions, around 60% of China’s iron ore imports still come from Australia, making the long-term stability of trade relations between the two nations critical for both economies.