LONDON (Reuters) - Rio Tinto RIO.X, the world’s third-largest miner, was optimistic about demand for iron ore, especially in China, but concerned that supply would not be enough to satisfy appetite, Chief Financial Officer Guy Elliott said Tuesday.
“We remain very positive about the outlook for iron ore in terms of demand over the next few years. We are more concerned about supply,” Elliott said at the Reuters Mining and Metals Summit televised to London from New York.
A warning from the world’s largest miner, BHP Billiton (BHP.AX), on Tuesday that China’s iron ore demand was “flattening” rattled markets sensitive to any hint of softening demand in the world’s second largest economy.
Elliott said Rio, the world’s second-largest iron ore producer after Brazil’s Vale VALE5.SA, sees secure demand, but significant producer delays constraining supply.
“We are currently at a level of 500 kg per head for the first time in China, and we expect that has a long way to go,” Elliott said.
“Our forecast is that steel consumption would peak in China at about 750 kg per head, and that would take place in approximately 2030,” he said.
Analysts have said that while Chinese demand would remain robust, supplies were tight as new iron ore projects get pushed back due to funding and infrastructure constraints. China, the world’s biggest steel producer and consumer, buys around 60 percent of global iron ore exports, mainly from Australia and Brazil.
China is also the world’s biggest iron ore producer, although the low iron content of its domestic ore makes it heavily reliant on imports, and a key driver of spot prices.
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Reporting by Susan Thomas; Additional reporting by Carole Vaporean