China iron ore demand ‘strong’

Rio Tinto says it expects to see strong iron ore demand from China as exports surge from the world’s biggest steel producer, despite last quarter’s plunge in the iron ore price.

Iron ore prices fell below $US100 a tonne to hit a 10month low in early April, from levels around $US130 a tonne at the start of the year, on the back of China’s property downturn and weakness in infrastructure demand.

Prices have since recovered to about $US110 a tonne.

Rio said on Wednesday that domestic steel demand in China was still sitting at similar levels to last year.

“But steel exports rose 30 per cent year-on-year during the first two months and are likely to remain historically elevated, in turn, supporting iron ore demand,” it said.

“The manufacturing sector remains strong, given increased industrial production and exports, while property activity remains weak, despite improved policy support. There is continued issuance of financing for infrastructure projects, although efforts are being taken to restructure local government debts.”

Rio WA iron ore operations kicked off with a slow start to the year, with weather disruptions at its ports cutting shipments by 5 per cent, compared to the first three months of 2023.

Rio’s Pilbara operations shipped 67.9 million tonnes of iron ore in the March quarter, with its mines producing 77.9 million tonnes, down 2 per cent compared to the same period last year.

The company has said it expects the rollout of its improved operating systems to eventually deliver productivity gains worth about 5 million tonnes from its iron ore operations.

While iron ore shipments and production fell in the quarter, Rio reported strong 11 per cent growth in its bauxite operations, producing 13.4 million tonnes.

Aluminium output lifted 5 per cent to 826,000 tonnes. Rio also reported stronger copper production for the quarter, with mined copper output up 7 per cent to 155,800 tonnes.

Rio shares last traded at $128.70.