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Mining heavyweight Rio Tinto's shipments of the steelmaking raw material iron ore have risen 5 % in three months, despite concerns of the US-China trade war dampening demand from Chinese steel mills.
The Anglo-Australian miner reported on Wednesday it had shipped 86.1 million tonnes of iron ore – Australia's most valuable export commodity – in the July-September quarter, up from 81.9 million tonnes a year earlier.
"We have delivered improved production across the majority of our products in the third quarter, with a solid result at our Pilbara mines driving increased sales of iron ore into robust markets," Rio Tinto chief executive Jean-Sébastien Jacques said.
"Our strong value over volume approach, coupled with our focus on operational performance and disciplined allocation of capital, will continue to deliver superior returns to shareholders over the short, medium and long term."
Rio on Wednesday lowered its forecasts for bauxite and alumina production forecast due to bad weather and maintenance issues.
Morgan Stanley analyst Alain Gabriel described Rio Tinto's bauxite and alumina output on operating challenges as "disappointing", having led Rio to trim guidance for the 2019 financial year. But the impact of negative earnings from lower bauxite and alumina were likely to be offset by the "robust operating momentum" in other divisions, he said.
Iron ore prices surged nearly 60% earlier this year after a fatal dam disaster at a Brazilian iron ore mine sparked production outages and prompted a worldwide supply shortage, with the benchmark price hitting about $US120 a tonne in June and delivering a windfall for iron ore miners.
The price has since dipped back below $US100 as supply begins to stabilise and the US-China trade war weighs on the economy of China, which makes about half of the world's steel output.
Commonwealth Bank analyst Gareth Aird on Wednesday said iron ore prices were forecast to ease from $US92 a tonne to average $US85 a tonne in the December quarter.
He said CBA forecast iron ore to fall further throughout 2020 and drift lower to close next year at $US67 a tonne.
"Supply has recovered following disruptions earlier this year to production in Brazil and Australia," Mr Aird said.
Steel mill margins in China, which drive iron ore prices in the short term, remain under pressure.
Rio shares closed down almost 1% to $89.74.
(Writing by Wenxin Wu Editing by Alex Guo)
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