Melbourne : Rio Tinto Group, the world's third-largest mining company, and Posco, Asia's most profitable steelmaker, are raising production as demand from carmakers and builders rebounds with the global economic recovery.
Posco will increase crude steel production by 16.6 per cent this year, and London-based Rio said yesterday there's strong demand growth after reporting a 49 per cent jump in output of iron ore, used in steelmaking.
Commodity producers are benefiting as China's exports surged 17.7 per cent in December and US manufacturing expanded at the fastest pace in more than three years. The steel market will grow by 9.2 per cent in 2010, on rising demand from the US, Japan and Europe, said the World Steel Association.
"Posco is sending a positive message that their clients may be restocking because the global economy is turning better," said Helen Lau, an analyst at OSK Asia Holding Ltd. "China faces increasing pressure on iron ore prices because of demand recovery in other countries."
China's $586 billion (Dh2.15 trillion) stimulus spending has boosted steel demand from automakers, builders and appliance manufacturers. Sales from Rio's iron ore mines in Australia hit a quarterly and annual record. Posco, based in Pohang, South Korea, said yesterday sales this year will advance 9.3 per cent and that it's planning to almost double capital spending.
Strong quarter
"This was another very strong quarter for iron ore production, driven by continuing high demand from China," Rio Chief Executive Officer Tom Albanese said in a statement. "We are seeing recovery across most of our key commodities, although we continue to be cautious on the state of the global economy going into 2010 as stimulus packages start to wind down."
Iron ore output jumped to 47.2 million metric tonnes in the three months ended December 31, from 31.8 million tonnes a year earlier, Rio said. Full-year production was more than 217 million tonnes, beating the company's forecast.
