Preview: Rio, BHP iron ore output to dip as China demand cools
By James Regan
SYDNEY (Reuters) - Rio Tinto (RIO.AX: Quote) (RIO.L: Quote) and BHP Billiton (BHP.AX: Quote) (BLT.L: Quote) are set to report lower-than-expected iron ore output for the March quarter after heavy rains and cyclones disrupted port and mining operations in Australia.
The losses could collectively reach as high as 4 million metric tonnes of ore - some 4 percent of overall estimated output for the quarter.
The shortfall, evident in shipping statistics, has been helping shore up seaborne-traded iron ore prices despite slowing demand from China, the biggest buyer of Australian ore.
"Less supply, not more demand, is keeping prices up," said a bulk commodities trader based in Australia, who sells ore mined in Australia and India based on the daily spot market.
Benchmark iron ore with 62 percent iron content .IO62-CNI=SI stood at $148.70 a tonne, according to Steel Index, the highest price since October 18.
BHP's outgoing iron ore chief, Ian Ashby, in late March warned of "flattening" iron ore demand growth from China, sending mining shares tumbling and knocking the Australian dollar.
But at least for now, the world no. 3 producer intends to push ahead with a $10 billion plan to expand production.
That should result in a strong upturn in output in the current quarter, traditionally robust due to improving weather across the Pilbara iron belt in Western Australia. Continued...