* Rio sees Q3 prices within 1 pct of Q2
* Rio says continuing to see growth in the market
* Sees high prices persisting
(Adds detail, background)
By Rebekah Kebede
PERTH, May 19 Rio Tinto , the
world's second-largest iron ore producer, expects global prices
to stabilise in the September quarter after a volatile start to
the year and sees only a small change in its quarterly price.
Rio Tinto expects iron ore prices in the September quarter
to vary by only around 1 percent compared with the June quarter,
Sam Walsh, the firm's iron ore chief told Reuters on Thursday,
underscoring a tight supply and demand balance.
"We are seeing continuing growth in the market," he said on
the sidelines of a meeting with Treasurer Wayne Swan, referring
to global demand for the steel-making raw material.
Walsh's assessment of market conditions is in contrast with
signs of slow buying from top consumer China as steel mills
there work off stockpiles of ore amid a slow down in steel
"(Price movements) indicate that we will continue with very
high prices which really are signifying that the market
continues to be tight," Walsh said.
"The prices for the next quarter look like they will be
within one percent of current prices," he added.
Chinese steelmakers had been banking on a resurgence in
construction in the second quarter to boost demand for steel but
tighter liquidity, thanks to Beijing's inflation-taming
campaign, has slowed down property projects.
Iron ore prices have tumbled from a 2011 peak of around $191
a tonne in February to a current price of around $176 a tonne
.IO62-CNI=SI. In March prices fell below $165 a tonne.
Walsh said Rio Tinto was on track to boost its output of
iron ore to around 230 million tonnes in 2011 from around 200
million last year as it expands its mines.
By 2013, he forecast the company's output would climb to 283
million tonnes, then 333 million two years after that.
Rio Tinto mines the majority of its ore in the Pilbara
region of Australia, making it the world's no. 2 producer behind
Brazil's Vale .
Australia's other big iron ore miners are BHP Billiton
, and Fortescue Metals Group .
The system whereby prices are set every three months based
on average spot prices over the preceding quarter was
spearheaded by BHP Billiton and quickly adopted by other
producers in lieu of the now-defunct policy of only pricing ore
once a year.
Steel mills, particularly in China, fought against the shift,
but eventually had no choice but to accept the new regime given
the dominance in supply wielded by a small number of large
(Additional reporting by Jim Regan; Editing by Balazs Koranyi)