Rio Tinto's iron ore shipments miss estimates due to May train derailment
Shares fall as much as 2.6% to lowest since March 18
Derailment led to 6 days of lost rail capacity
Flags possible delays at greater Nammuldi project
Updates with shares in paragraph 3 and China comment in paragraph
By Rishav Chatterjee
July 16 (Reuters) -Global mining giant Rio Tinto RIO.AX, RIO.L reported second-quarter iron ore shipments below analyst estimates on Tuesday, reflecting impacts to production from a train derailment in mid-May.
The world's largest producer of iron ore shipped 80.3 million tons (Mt) of the steel-making commodity from its Pilbara operations in the three months ended June 30. This was 3% higher than the previous quarter's 78 Mt but below the Visible Alpha consensus estimate of 82.1 Mt.
Rio's Australia shares fell as much as 2.6% to A$116.75 in early trade, hitting their lowest since March 18. The stock was last down 1.8% at A$117.64.
Rio said in May that a train had derailed at its Western Australia iron ore operations, leading to around six days of lost rail capacity.
The firm's report comes as hopes for more stimulus in China have helped iron ore prices rebound recently after weak demand from the country's construction sector led to a dull first half.
"The (Chinese) government has provided additional measures for the property market to destock the large inventory overhang," Rio said on Tuesday.
China's steel exports in the first half of the year jumped 24% from a year earlier, pointing to a faltering construction sector, which is a heavy user of the metal.
Jefferies analysts do not expect Chinese steel exports to remain at multi-year highs. However, they expect Chinese steel production to remain resilient, which could bode well for Rio's shipments and production in the coming quarters.
Rio Tinto reaffirmed its annual iron ore shipments forecast of between 323 and 338 Mt.
The miner said economic conditions in top iron ore consumer China are still being supported by a recovery in manufacturing operations and more resilient exports. It, however, said that housing activity in Asia's largest economy remains weak.
The company flagged possible delays at its greater Nammuldi iron ore project, part of its next tranche of mine replacements.
Mined copper production on a consolidated basis came in at 171 thousand tons (Kt) for the quarter, up 10% from the prior quarter as the company continued to ramp up operations at its Oyu Tolgoi underground mine in Mongolia.
The company, however, lowered its annual alumina production estimates to a range of 7.0-7.3 Mt from 7.6-7.9 Mt, reflecting reduced operation rates at its Gladstone operations in Queensland.
Separately, the miner said its iron ore project in Simandou, Guinea had received all regulatory approvals from the local and Chinese governments.
Reporting by Rishav Chatterjee and Shivangi Lahiri in Bengaluru; Additional reporting by Melanie Burton; Editing by Maju Samuel and Subhranshu Sahu
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
