Rio Tinto says strong year-end iron ore push needed as China demand surges

(Reuters) -Rio Tinto said on Tuesday it needs a strong year-end finish to meet its iron ore shipment target, even as Chinese demand gathered pace as global economies front-loaded investment ahead of looming tariffs.

Iron ore prices have surged to their highest levels since February, driven by targeted infrastructure stimulus in China that boosted steel production, Rio said, with China’s iron ore imports hitting a record high in September.

Rio said it shipped 84.3 million tons from its operations in Western Australia during the third quarter, narrowly missing the Visible Alpha consensus estimate of 85.5 million tons.

Four cyclones in the region disrupted iron ore operations early this year, prompting Rio to forecast its 2025 iron ore shipments at the lower end of its guidance range of 323 million to 338 million metric tons.

"A strong Q4 performance is required as the system remains tightly balanced and has limited ability to mitigate further losses," the world's largest iron ore miner said.

Australian-listed shares in Rio gained up to 3.6% in early trading on Tuesday to reach the highest level since late September, reflecting a broader rally among iron ore miners. Peers BHP and Fortescue gained more than 2% each.

Rio said China had entered the third quarter grappling with persistent deflation, sluggish manufacturing, weak exports and ongoing property market woes.

Still, Beijing remains focused on hitting its 5% annual economic growth target, leaning on targeted support for infrastructure and technology rather than broad-based stimulus, the company added.

Rio also noted China had diversified its iron ore supply sources, boosting purchases from smaller iron ore suppliers, with the major iron ore producers’ combined shipments remaining flat on the year.

The quarter was the first under new CEO and former head of iron ore Simon Trott, who in August announced a simplification of the company's structure into three divisions: global iron ore, aluminium and lithium, and copper.

Rio said it remained committed to safety after a fatality at its Simandou operarations in Guinea, where iron ore shipments are set to start before year-end.

Like its peers, Rio is ramping up the production of copper, which is expected to be in high demand during the transition to greener forms of energy.

Rio produced record copper at its Oyu Tolgoi operations in Mongolia where the miner remains on track to boost copper output by more than 50% this year.

The miner reported a second consecutive record quarter of bauxite production and lifted its full-year estimate to a range of 59 million tons to 61 million tons, on the back of strong performance at the Amrun bauxite mine in northern Australia.

(Reporting by Rishav Chatterjee and Rajasik Mukherjee in Bengaluru; Additional reporting by Melanie Burton in Melbourne; Editing by Pooja Desai and Jamie Freed)