China, the world’s largest producer and consumer of steel, is battling a severe property slump, but both Rio and its larger rival BHP have previously reported the country’s manufacturing sector is strong, increasing production and exports.

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“China’s domestic steel demand trended at levels similar to last year, but steel exports rose 30 per cent year-on-year during the first two months and are likely to remain historically elevated, in turn, supporting iron ore demand,” the company said.

The high steel output may be a factor in prices for the key commodity slumping 27 per cent over the first three months of the year, averaging $US123 ($192) per dry metric tonne for 62 per cent grade ore.

China’s seaborne steel shipments rose slightly and portside inventories increased by 24 million tonnes. “Mill margins in China oscillated around break-even levels, maintaining iron ore product price relativities within historically narrow bands,” Rio said.

A report from Capital Economics – cited by Bloomberg – says iron ore will hit $US100 a tonne by the end of the year as China’s property woes worsen.

The London-based research firm said falling steel production and caps on highly polluting mills, coupled with swelling supply from big miners, will put prices under pressure. Demand from the rest of the world is unlikely to pick up the slack as China accounts for nearly 70 per cent of the global market, Capital Economics said.

The company reported its copper production, a key focus of its strategy to grow its output of materials critical to the globe’s accelerating energy transition, was 7 per cent higher than in the first quarter of 2023 at 156 thousand tonnes.

Demand is growing, driven by energy transition sectors including electric cars, power grid and renewables and robust Chinese growth despite the weakening property sector, it said.

“We remained focused on growth in energy-transition materials, with the ramp-up at Oyu Tolgoi underground, the first full quarter of recycled aluminium production from Matalco and further progress at Simandou, our high grade iron ore project in Guinea,” the miner said.

Rio said the bulk of its exploration expenditure over the quarter was focused on copper in Chile, Kazakhstan and Serbia, nickel in Peru, Australia, Brazil and Canada, lithium in Canada, US, Rwanda, potash in Canada and heavy mineral sands in South Africa and Malawi.

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