SYDNEY Global miner Rio Tinto on Thursday cut its 2016 guidance for iron ore shipments by as much as 5 million tonnes after releasing lower third-quarter production data, citing shipping interruptions.
The downward revision - equivalent to as much as $290 million at current ore prices - comes as the steelmaking commodity stages a recovery on the back of a surprise lift in demand from China.
Rio Tinto, the world's second-biggest producer of iron ore, said third-quarter shipments from Australia fell 2 percent from the previous quarter to 80.9 million tonnes and 5 percent from the same period a year ago.
"Shipments were reduced by port and rail maintenance during the quarter and annual shipment guidance is revised to between 325 and 330 million tonnes for 2016," the company said.
Prior full-year guidance was for 330 million tonnes, according to Rio Tinto. Calendar 2017 production guidance was left unchanged at 330 million to 340 million tonnes
Rio's cutback came as smaller rival Fortescue Metals Group boosted iron ore shipments by 5 percent in the September quarter to 43.8 million tonnes, adding that its costs had dropped for an eleventh straight quarter.
Iron ore accounts for the majority of Rio Tinto's worldwide revenue and all of Fortescue's revenue. It is mostly mined in Australia and sold to Chinese steel mills.
RBC analyst Paul Hissey said in a note said he favoured Rio Tinto over other major diversified producers due to its large exposure to iron ore, which had the potential to sustain current price levels.
Iron ore was selling for $58 a tonne on Thursday, the highest in more than a month, driven by an unexpected surge in demand from China.
China's iron ore imports reached 93 million tonnes in September, the second highest on record, as healthy profits pushed steel mills to ramp up output.
"Steel consumption in China remains stable," Fortescue Managing Director Nev Power said in a statement.
Fortescue said it sold its ore, which has a lower iron content than its bigger rivals, at 82.5 percent of the benchmark price, or $48.36. a tonne, over the July 1-Sept 30 period.
Mining costs had declined by 5 percent to $13.55 per tonne, although the figure excluded shipping and insurance, according to Fortescue.
BHP Billiton on Wednesday held its fiscal 2017 production guidance for iron ore of 265 million to 275 million tonnes after posting a modest 1 percent decline in output in the September quarter.
(Reporting by James Regan; Editing by Richard Pullin)