Rio Tinto to cut iron ore output but BHP Billiton says no need
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Tuesday, November 11, 2008
Rio Tinto is to cut its iron ore output 10 percent as China weakens but BHP says its sees no reason to make cuts.
Facing a dramatic drop off in Chinese steel production, Rio Tinto Ltd/Plc (RIO.AX) will cut iron ore shipments by up to 20 million tonnes in 2008 in hopes that industrial activity in China will improve next year.
A $600-billion economic stimulus package announced by China on Sunday to fund major infrastructure works and keep as much financial malaise as possible away from its shores, could reignite steel demand by the first quarter, though analysts could not say by how much.
"A lot of that funding is going to go to new construction and that will require a lot more steel, but how that translates into iron ore sales next year is yet to be seen," said DJ Carmichael & Co analyst James Wilson.
China's official Xinhua news agency said the world's fourth-largest economy approved 4 trillion yuan ($586 billion) in new government spending between now and 2010, focused largely on infrastructure and social projects.