Rio Tinto Group, the second-biggest iron ore supplier, sees weaker short-term demand as China’s economy shifts away from infrastructure-intensive growth.
The economy’s transition probably means “a few years of reduced consumption of new steel,” as inventory is run down in the housing sector, iron ore head Andrew Harding said.
“Supply is still coming on-stream while, in the short term, demand growth is not looking as strong as it was,” Harding said in an interview published Thursday on the company’s website.
China, which consumes about two-thirds of seaborne iron ore, saw imports fall in May, highlighting weakening demand, according to Goldman Sachs Group Inc. Prices touched a decade low in early April.
While BHP Billiton Ltd. and Vale SA have flagged trimming or slowing planned expansions, Rio is committed to its plan to hit a target of raising output to 350 million metric tons by 2017 from 330 million tons this year.
A decision to defer port works in Australia will slow the pace of BHP’s planned expansions, the Melbourne-based company said in April, while Vale said last month it would consider reducing output from its most expensive mines.