Rio Tinto expects the global iron ore market to stay balanced through 2019 despite a likely moderation in steel demand growth in China, the world’s biggest steel consumer, a senior executive said on Friday.
“I think the iron ore market is pretty well balanced…We don’t see remarkable change in supply and demand balance through 2019,” Chris Salisbury, chief executive iron ore at Rio Tinto, told Reuters in an interview.
Rio, the world’s second largest iron ore miner, expects solid demand for the steel-making ingredient, especially for its high-grade iron ore as Chinese steelmakers increasingly focus on higher productivity and lower emissions.
Higher quality ore produces more steel for each tonne that is processed, and can reduce emissions as less coke is used in production.
“We will see a slowdown in China overall as the economy will moderate through 2019,” Salisbury said. But he noted the miner will continue to increase output of higher grade ore to meet increasing demand in China.
A rise in China’s stocks of rebar, a construction steel product, to nearly five-year highs reflected a rebound from extremely low inventory levels in 2017, he said.
“We’ve gone through a construction slowdown during the winter period, but steel production was still quite strong during the period and what we are seeing is a little bit of imbalance between steel production and construction offtake,” he said. “It’s not catastrophic.”
Rio, which supplies about 330 million tonnes of iron ore a year to mainly Asian customers, plans to spend $1 billion a year over the next three years for maintenance of its iron ore mines.
It will also invest another $3 billion in total on new iron ore mines, including the Koodaideri mine in the Pilbara region in Australia, Salisbury said.
Rio was on track to finish a feasibility study this year for the planned “intelligent” Koodaideri mine, which will fully incorporate technologies such as robotics and driverless trains and trucks on a single site, he said.
Salisbury downplayed the impact on the steel market of U.S. tariffs and the potential for retaliation by other countries.
The United States is imposing import duties of 25 percent on steel and 10 percent on aluminum from Friday, although U.S. President Donald Trump on Thursday temporarily excluded six countries and the European Union from the duties.
“The portion of steel exports of our iron ore customers in Japan, South Korea, Taiwan and China to the United States is quite small,” he said.
Reporting by Yuka Obayashi; editing by Richard Pullin.
