Third quarter production numbers from mining giant Rio Tinto (RIO) may not seem too exciting at first glance to people who aren’t mining investors, but they offer an interesting glimpse into what is happening in the global economy at the moment.
Looking at how the global environment affects its markets, the iron ore, aluminium and copper producer said global economic activity in the third quarter of this year was ‘generally strong’, helping to sustain optimism for a widespread recovery in 2021.
However, it added that recent high-frequency data suggests that the rate of recovery in growth is slowing in most economies, with pent-up demand dissipating, and the rise of renewed lockdowns threatening recovery.
STRONG CHINESE COMMODITY DEMAND
Rio said commodity demand in China has been supported by commodity-intensive stimulus measures, and that Chinese iron ore demand is at record levels against a backdrop of recovering seaborne supply that was disrupted earlier in the year.
However, with the major producers expected to deliver strong volumes in the fourth quarter, iron ore inventories are expected to grow modestly as China’s steel consumption eases from record highs and scrap consumption increases.
Japan, South Korea, Taiwan and Europe continue to show signs of recovery, Rio added, but steel production excluding China remains down significantly year on year.
The miner said the automotive sector is continuing to see recovery, supporting some demand for aluminium products, but the industry remains below pre-COVID-19 levels globally.
In terms of Rio Tinto’s production numbers themselves, the FTSE 100 miner reported a slight fall in third-quarter iron-ore production from Australia’s Pilbara region on a year-on-year basis, as its operations returned to normal following disruptions caused by the Covid-19 pandemic.
Pilbara iron ore output for the three months through September fell 1% to 86.4 million tonnes on a year-on-year basis. Compared to the second quarter, however, production rose 4%.
Iron ore shipments fell 5% year-on-year following planned port maintenance activity. Among other commodities, Rio Tinto reported 5% rise in bauxite production, a 1% rise in aluminium production, an 18% drop in mined copper production, a 9% drop in titanium production and a 21% drop in IOC pellet production.
Rio Tinto said its production guidance remained unchanged from its second-quarter review, with the exception of refined copper, which was updated on 19 August, and titanium dioxide slag, which was now expected to be around 1.2 million tonnes.
Shares in the miner gained 0.72% to £46.91.