Rio Tinto says ‘front-loaded’ economy drives iron ore price surge

Rio Tinto says prices for Australian iron ore surged to eight-month highs amid a scramble to get in front of the full impact of a long-simmering trade war between the Trump administration and the Chinese government.

Rio is the country’s biggest exporter of iron ore, Australia’s most lucrative commodity and a crucial revenue stream for the federal budget. A recent rally in its price has coincided with tensions between Chinese buyers and Australia’s largest miners, most notably Rio’s rival BHP.

According to S&P Global Platts, “benchmark” ore, with 62 per cent iron, on October 13 rose to $US109.20 a tonne – the highest price since February 21. The price is now about 18 per cent higher than on June 25, when it was $US92.75 a tonne. The price surge fits with Chinese data that showed iron ore imports in September were higher than in any month this year.

Rio said on Tuesday that Chinese steel production in the first nine months of the year was up 4 per cent on last year, while Chinese steel exports were up 9 per cent, suggesting domestic demand for steel was failing to keep pace.