January 22, 2020 / 3:25 PM / a month ago

Chinese steelmaker HBIS in yuan-denominated iron ore deal with Brazil's Vale

BEIJING, Jan 22 (Reuters) - HBIS Group, China’s second-biggest steelmaker, on Wednesday said its trading arm had secured two letters of credit to purchase iron ore from Brazil’s Vale in a 200 million yuan ($29 million) contract denominated in the Chinese currency.

China is the world’s biggest iron ore consumer and has been trying to increase its influence over pricing of the steelmaking raw material, for which contracts are usually in dollars, and the Vale deal marks the first yuan-denominated deal for HBIS with an overseas ore supplier.

One of the letters of credit - issued by banks to guarantee payment for a commodity - was from Hong Kong and the other from mainland China, HBIS said on its official Wechat account, without specifying the tonnage it would buy or length of contract.

Vale signed its first deal to sell iron ore in yuan last November - a spot transaction to supply China’s Yongfeng Group using the Dalian Commodity Exchange iron ore price.

HBIS added that it was in close communication with other international miners over settlement in yuan. ($1 = 6.9030 Chinese yuan renminbi) (Reporting by Tom Daly and Min Zhang Editing by David Goodman )

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