RMB-Denominated Commodity Pricing: Iron Ore Leads the Way, Oil Is Hard to Replicate
N.R. Finch
A J.P. Morgan research note dated August 3 finds that the renminbi's share of commodity settlement has hit a record — 29% of China's goods trade — but the 'petro-yuan' framing overstates reality. Iron ore, not oil, is the near-term breakthrough.
How far has renminbi settlement actually come?
PBOC data show renminbi settlement reached 29% of China's goods trade in 2025, surpassing the previous 2015 peak and setting a new record.
This means → the post-2015 decline has fully reversed; the trend is structural, not cyclical.
But settlement is not pricing. A cargo can be priced off a dollar benchmark and paid in renminbi — that cuts dollar payment exposure but does not eliminate dollar exchange-rate risk.
Why iron ore, and not oil?
Oil pricing remains anchored to the dollar, with sellers spread globally. China's buying power alone cannot shift the pricing regime.
Iron ore is different: China is the dominant buyer, and industrial demand plus state-level procurement concentrate leverage on one side.
BHP has agreed with China Mineral Resources Group to price part of its iron ore sales against a four-benchmark basket that includes two renminbi-denominated indices. Vale has incorporated Dalian Commodity Exchange iron ore futures into some pricing and hedging arrangements.
In plain terms = the buyer who purchases the most has the strongest claim to price in its own currency — and in iron ore, China is that buyer.
What does the Simandou mine mean?
In early 2026, China Baowu Steel Group secured operational control of the Simandou iron ore project in Guinea — one of the world's largest known undeveloped iron ore deposits.
As of 2024, China's cumulative outbound direct investment in commodities stood at roughly $270 billion, growing at about 14% annually over the past decade.
This means → Chinese firms have shifted from minority equity stakes to seeking operational control. J.P. Morgan puts it directly: "If Chinese enterprises have greater influence over supply, financing, and long-term contracts, renminbi pricing and invoicing become easier to embed in deal structures."
Is the settlement infrastructure ready?
CIPS — the Cross-Border Interbank Payment System, China's dedicated renminbi clearing network — continues to grow in daily volume. The PBOC's swap-agreement network has expanded, and offshore renminbi deposits have grown nearly 60% since the pandemic.
The Shanghai International Energy Exchange launched renminbi-denominated crude futures in March 2018. Since then, Dalian iron ore futures, Shanghai copper futures, and others have opened to foreign investors; regulators have designated 38 commodity derivatives contracts as "domestically listed, internationally accessible."
J.P. Morgan notes, however, that Chinese commodity futures still lag significantly behind Brent, WTI, and London Metal Exchange benchmarks in liquidity and global pricing influence.
What are the three structural constraints?
Pricing is far harder than settlement. Paying in renminbi reduces dollar payment exposure but does not establish a renminbi benchmark — dollar exchange-rate risk remains.
Countries want diversification, not a renminbi bet. Most nations are not replacing dollar dependence with renminbi dependence; they are broadening local-currency settlement and regional payment arrangements. The renminbi is one beneficiary, not the only one.
The dollar's edge is ecosystem-wide. The dollar accounts for 89% of global FX turnover, 82% of trade finance, 57% of FX reserves, and 40–50% of global trade invoicing. Capital-market depth, hedging-tool breadth, and safe-asset supply form a moat the renminbi — still subject to capital controls and managed exchange rates — cannot yet match.
What is J.P. Morgan's bottom line?
The renminbi's opportunity lies in "capturing a larger share of trade and financial transactions where China is the key buyer, financier, investor, or infrastructure provider" — not in displacing the dollar outright.
China's 15th Five-Year Plan proposals explicitly call for advancing renminbi internationalization, but whether iron ore pricing can move from bilateral agreements to market-level benchmarks remains the critical test.
In plain terms = the renminbi is not trying to knock the dollar off its throne. It is claiming pricing power first in the commodities where China's voice is loudest — starting with iron ore — and expanding one product at a time.
Content is for reference only, not financial advice.