Rio Tinto: Iron ore and steel demand to see modest growth until 2030

SEATTLE (Scrap Monster): Rio Tinto announced that it expects global iron ore and steel demand to rise modestly over the next fifteen years. The miner forecasts the global iron ore demand to rise at 2% compounded annual growth rate (CAGR) to 3 billion mt by 2030. Also, global steel demand is expected to rise by 2.5% a year between now and 2030.

According to Rio Tinto, Chinese steel production is likely to witness modest growth over the next fifteen years, whereas rapid demand growth will be witnessed in other emerging markets including southeast Asia and India. The Chinese steel production is projected to reach 1 billion tonnes by 2030, despite fears of economic growth slowdown. This is much higher when compared with the current production of just over 800 million tonnes. Rio Tinto expects significant jump in Chinese exports of higher value added finished goods, on the back of increased construction and infrastructure development initiatives in other parts of the world. The global steel demand in the region excluding China is expected to rise by 65% by 2030.

However, the miner did not express its views on iron ore price in the next fifteen years. Meantime, the raw material prices had touched a bottom of $44 during July this year, but have managed to rise to $55.80 since then.

Rio Tinto noted that it has successfully lowered the iron ore cash costs from $20.40 a tonne during H1 2014 to $16.20 a tonne in the first half of 2015 on account of drastic cost-cutting measures and improved mine productivity. It maintained its production target of 335 million tonnes of iron ore during next year and 350 million tonnes during 2017.

Meantime, BHP Billiton has lowered its Chinese steel demand forecast from earlier 1-1.1 billion mt during mid-2020’s to 935-985 million mt.