Rio Tinto released its first-quarter operational update yesterday. The company sees demand recovery in China.
The company’s first-quarter iron ore production was better than expected.
Rio Tinto released its first-quarter operational update yesterday. Its iron ore production at Pilbara was 77.8% million metric tons, a 2% year-over-year rise. Among other commodities, bauxite shipments increased 8% YoY while aluminum shipments fell 2% over the period. The plunge in aluminum prices has prompted many smelters to shut down. Rio Tinto’s mined copper production fell 8% YoY in the first quarter.
According to Rio Tinto, “Demand for the high-quality iron ores we produce remained strong in the first quarter of 2020, mainly driven by a combination of seaborne supply disruptions and solid demand from China’s steel mills despite Covid-19 impacts.” Seaborne iron ore prices were relatively strong in the first quarter.
Rio Tinto expressed optimism over the demand recovery in China. However, it added, “in the rest of the world, the outlook is more uncertain.” Chinese demand is a key driver of seaborne iron ore prices and the country accounts for roughly two-thirds of global seaborne iron ore demand.
China’s GDP contracted 6.8% in the first quarter, missing analysts’ estimates. That said, the fall in China’s economic activity is much lower as compared to what we could see in other countries. While the pandemic originated in China, the country is back to normal business. In contrast, a large part of the global population is under forced lockdowns. While the lockdown is a health necessity, they are taking a toll on economic activity.
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