When Rio Tinto delivered its June quarterly report, it provided a snapshot into the current state of play in China.
“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 said.
The major miner said it observed a 12 per cent drop in iron ore prices in the June quarter as “China’s steel demand recovery encountered persistent headwinds, and steel prices and mill profitability remained compressed”.
This saw China’s steel exports rise to an annualised level of 100 million tonnes which hasn’t been seen since 2016.
Despite this, China’s iron ore imports remained strong, driven by reduced scrap availability and challenges to domestic iron ore production.
“Imports over the quarter declined marginally below their 1.25-billion-tonne-per-annum rate in the first quarter, but trended close to record seasonal levels,” Rio said.
“Seaborne iron ore supply performed strongly over the quarter, with June shipments from Australia and Brazil estimated at or close to all-time highs.”
Rio Tinto shipped 79.1 million tonnes of iron ore in the June quarter, which was down 1 per cent from the June quarter of 2022. The company put this down to a train derailment and planned maintenance at the Dampier port in WA.
Rio said it expected its full-year shipments for the 2022–23 financial year (FY23) to be in the upper half of its 320–335 million tonne range.
The major miner also observed a 10 per cent decline in London Metal Exchange (LME) aluminium prices over the June quarter, and an 8 per cent drop in LME copper prices across the three months.
Rio chief executive Jakob Stausholm said the company aims to triple production at its Oyu Tolgoi copper mine in Mongolia by the end of the decade. Production at Oyu Tolgoi (on a 100 per cent basis) increased by 40 per cent from the second quarter of 2022.
This was supported by a boost in head grades from 0.4 per cent to 0.52 per cent. Rio is currently ramping up underground production at Oyu Tolgoi.
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