Rio Tinto Group said second-quarter shipments of iron ore fell 1% from a year earlier, as China’s faltering economic recovery continued to weigh on demand.
The world’s biggest iron ore producer shipped 79.1 million tons of the steelmaking ingredient in the three months to June 30. While it left full-year export guidance for its core product unchanged, it trimmed output forecasts for alumina and refined copper.
Commodity-exporting heavyweights including Rio Tinto and Vale SA are being closely watched for insights on a slowdown in China that could have significant ripple effects across the global economy. The biggest metals-consuming nation’s disappointing post-pandemic recovery and persistent property woes have put downward pressure on steel demand and iron ore prices.
“China’s economic recovery has fallen short of initial market expectations, as the property market downturn continues to weigh on the economy and consumers remain cautious despite monetary policy easing,” Rio Tinto said in a statement Wednesday. The steel demand recovery in the nation encountered “persistent headwinds” in the second quarter, it said.
Iron ore prices, which have staged a partial recovery since late May, could come under more pressure due to an increase in shipments from Vale. Output from the Brazilian miner, the world’s No. 2 iron ore supplier, rose more than 6% last quarter.
Iron ore edged up 0.1% to $113.85 a ton as of 9:13 a.m. in Singapore. The steel-making staple is around 14% lower than this year’s closing high in mid-March.
Rio Tinto said it expects full-year iron ore shipments to be in the upper half of its 320 to 335 million ton range. It lowered alumina full-year production guidance to 7.4 million tons to 7.7 million tons from as much as 8 million tons previously, and refined copper to 160,000 to 190,000 tons from as high as 210,000 tons.
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“Production downgrades during the quarter highlight that we still have much more to do,” Rio Tinto Chief Executive Officer Jakob Stausholm said in the statement.
Second-quarter aluminum production was up 11% year on year to 814,000 tons, while copper output fell 1% to 145,000 tons.
The company’s expansion of it Oyu Tolgoi project in Mongolia — one of the world’s largest copper mines — is progressing ahead of schedule, the company said. It remains on track to more than triple production of the metal by the end of the decade.
Rio Tinto said negotiations over the co-development of the massive Simandou iron ore project in Guinea, in which it has a joint stake with Chinese producers and the government of the West African nation, continued to show progress but gave no production timeline.
The miner continues to branch out from its core iron ore business, with ambitions to expand into metals that will underpin the clean energy transition.
Rio Tinto has a lithium project in Argentina and hopes to develop what would be Europe’s largest mine for the battery metal in Serbia, despite having its application blocked by authorities there earlier this year. It’s focused on consulting with major stakeholders in the Serbian project to support what it sees as a “world class asset,” the company said.
--With assistance from James Fernyhough.
(Updates with details on China headwinds from third paragraph)
