Rio Tinto Says Major Miners' Iron-Ore Supply Lagging Expectations -- Commodity Comment
July 15 2021 - 7:28PM
Dow Jones News
By Rhiannon Hoyle
Rio Tinto PLC on Friday recorded a sharp fall in second-quarter
iron-ore shipments from Australia, while also notching year-on-year
production declines for bauxite and copper. Here are some remarks
from its operational report:
On iron-ore demand:
"The iron-ore price has remained resilient on a surge in demand
while supply has struggled to keep pace. China's steel demand is up
5% year on year in the first half, with the construction and
automotive sectors performing strongly. Consumption was also robust
across the rest of the world, with demand recovering plus-15% in
2021 versus 2020.
On iron-ore supply:
"The major iron-ore producers' supply continues to lag
expectations, while high-cost supply balances the overall market.
Meanwhile, scrap is recovering from the lows in the first half of
2020, with global scrap consumption in the first half of 2021 set
to rise 18% year on year as crude steel output and scrap
availability improves."
On aluminum:
"The aluminum price has continued to be supported in tight
physical markets with elevated LME [London Metal Exchange] and
premia, and strong demand in global semis."
On copper:
"Copper prices have continued to rally driven by multi-year
weakness in supply growth (at circa 1% year on year) and strong
demand recovery in China and the rest of the world. Investor
positions challenged all-time highs, although have since retreated
from the first quarter peak."
On the global economy:
"We expect continued global recovery with most key indicators of
economic activity back to pre Covid-19 levels. This follows
supportive government policies and vaccine deployment success. We
remain watchful of risks, in particular variant infection and
vaccination rates. Rising inflation is primarily being driven by
the current imbalances in supply and demand, as industry producers
adjust activity following some disruption."
On China:
"China's economic growth is becoming more balanced on fading
stimulus-related demand and tightening credit conditions.
Consumption and non-real estate demand has continued to
recover.
On the U.S.:
"Consumer confidence is rising in the U.S. as Covid-19
restrictions are reduced. Consumer demand is expected to rotate
from goods towards services while supply gradually responds to
stronger activity. Housing market growth is slowing from the peak
in starts in the fourth quarter of 2020 and first quarter of 2021,
albeit settling at a historically strong level."
On Europe:
"Economic indicators in Europe show a strong recovery is already
underway, however some countries' reopening plans are at risk with
the variant surge."
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
July 15, 2021 19:23 ET (23:23 GMT)
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