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The mining major bought 100,000 tonnes of Mining Area C fines, priced at $145.50 per tonne cfr Qingdao, trading sources said.
“It could be that they are trading tonnages as well. It could mean they are so tight themselves that they want to buy cargo, or it can be seen as giving support to the market,” a Singapore-based trader told Steel First.
Iron ore prices have retreated substantially since reaching a 13-month high on January 8. The Metal Bulletin Iron Ore Index on Wednesday fell $5.02 to $145.40.
Another Singapore-based trader said: "I don’t think BHP was trying to support the market, because it doesn’t make too much of a difference with only one cargo. If they really wanted to do it, they wouldn’t do it on a platform like this as it would have been too obvious.”
The move by a miner to buy back its own material raised some eyebrows, but exchanges are generally open to any market participants that want to buy or sell iron ore, and the same can happen on the open spot market.
“If listed companies can buy back shares to support their performance, miners can buy back iron ore to suit their needs,” said one industry source. “It is because the market right now is in a downbeat mood that BHP’s move seemed conspicuous.”
BHP declined to comment on the specific transaction, but a spokeswoman said: “It is very normal for industry participants (steel mills, traders and producers) to both buy and sell cargo to balance their books."
“This is also the case on both the Beijing and Singapore platforms. Such transactions occurring on the platforms are to the benefit of all market participants in that it supports transparent market pricing and market liquidity.”
Global Ore said it “operates a trading platform, in full compliance with regulatory and market surveillance commitments, where consumers, producers, and traders can trade iron ore as per their requirements”.
Rival China Beijing International Mining Exchange (CBMX) declined to comment.
BHP Billiton reportedly bought a cargo of its own iron ore from Global Ore on Wednesday January 16, seen by at least some market participants as a move to prop up a weakening market.