Rio Tinto Expects China Focus on Emissions to Restrain Steel Exports -- Commodity Comment
April 19 2021 - 7:38PM
Dow Jones News
Rio Tinto PLC on Tuesday reported a lift in first-quarter
iron-ore shipments, despite slightly weaker output year-on-year, as
it sold from stockpiles. Production of other commodities, including
bauxite and copper, was mostly lower, too. Here's some remarks from
its quarterly report:
On steel:
"Steel prices in China finished the quarter at decade highs as
construction activity and steel demand in the first quarter
exceeded both 2020 and 2019. Strong steel demand and margins, at
their highest since 2018, have lifted demand for higher quality
(i.e. Pilbara Blend fines) and direct charge (i.e. Pilbara Blend
lump) iron-ore products. China's renewed focus on reducing
steelmaking emissions will likely restrain steel exports in 2021,
supporting margins globally."
On aluminum:
"The aluminum price has rallied following a recovery in global
demand and investor inflows. Logistical constraints combined with
some inventories being tightly held has resulted in tighter
physical markets."
On copper:
"Copper prices in the first quarter are up over 50% versus the
same time last year, having reached a nine-year high in the
quarter. The rally came on the back of strong demand in China,
recovering demand elsewhere and ongoing disruptions to mine and
scrap supply, all amplified by strong investor interest."
On China:
"China's industrial economy continues with strong momentum. Last
year's stimulus programmes gave rise to a sustainable recovery in
property and infrastructure construction. Policy focus is now
shifting from supply (investment) to demand (consumption)--growth
is therefore expected to pivot towards consumption of goods and
services."
On the U.S.:
"Growth in the United States has improved due to the rapid
progress of vaccinations and government policy support. Stimulus
packages combined with a re-emerging consumer are expected to
support strong growth in the near term. The prospect of an
infrastructure bill enhances the outlook further but may bring
inflationary pressures."
On Europe:
"Europe's economic recovery remains subdued due to lock-downs
and a slower roll-out of vaccination programs. However, growth is
expected to improve progressively with the roll out of the Recovery
Fund (EUR750 billion over five years) which should support
investment in infrastructure, transport, energy and
construction."
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
April 19, 2021 19:23 ET (23:23 GMT)
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